Insurance Journal West 2023-11-20 by Insurance Journal

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November 20, 2023 • Vol. 101 No. 21

Contents Idea Exchange

Special Report

News & Markets

8 9

Special Report: Making a Great Place to Work: E&S Brokers Share Their View on Talent Strategies

12 SEC Sues SolarWinds for

Spotlight: Auto Claimants More Satisfied Even Though Repairs Taking Longer

13 Global Insurance Prices

Closer Look: Top 50 Personal Lines Leaders

Spotlight: The Next Chapter: Employment Practices Liability

S&P: Struggles in Personal Auto Insurance to Subside More Slowly Than Expected

Largest Decline Ever in Agency M&A Through First Three Quarters: OPTIS

Concealing Risks Before Massive Hack

Continue to Stabilize in Q3 as US Cyber Premiums Drop: Marsh 5 Brokers Report Strong Revenues During Q3 as Favorable Market Climate Continues

Is It Covered?: Revisiting Terrorism Issues

The Competitive Advantage: Carrier Operational Stability

Buying and Selling: 5 Tips for Successful Agency Transactions

How a CRM Can Help Your Firm Create Compound Interest

Higher Repair Costs, Supply Line Delays Drive Business Interruption Claims

Closing Quote: The 4 Key Factors Contributing to Rising Insurance Rates

Ending Polarization and Building Future Leaders: Travelers CEO

Harvard Claims Marsh Is to Blame for Its Loss of $15M in Coverage for Admissions Fight

Companies May Be Employers of Contract, Franchise Workers Under US Labor Rule

Departments 6 Opening Note

10 Figures

4 | INSURANCE JOURNAL | NOVEMBER 20, 2023

11 Declarations

16 Business Moves

18 People

27 My New Markets

INSURANCEJOURNAL.COM

Opening Note Write the Editor: awells@insurancejournal.com

Chairman of the Board Mark Wells | mwells@wellsmedia.com Chief Executive Officer Joshua Carlson | jcarlson@insurancejournal.com

ADMINISTRATION / CIRCULATION

Ransomware Attacks Rise Again

ansomware attacks are up 95.41% globally in 2023 year over year, a trend showing no signs of slowing. The number of ransomware victims to date in 2023 (3,311) has already surpassed totals for the entirety of 2021 (3,048) or 2022 (2,670). This year could be the first with over 4,000 ransomware victims posted on leak sites. The Q3 Ransomware Report from cyber insurance specialists Corvus shows the third quarter saw a further increase with 1,278 victims observed on ransomware leak sites, an 11.22% increase over the second quarter. September was the ninth consecutive month of year-over-year increases, and the rest of the year is expected to continue the trend. While ransomware attacks typically decline in the summer months, this year’s decrease was later and shorter than usual. Following seasonal ransomware patterns, attack velocity is expected to climb in Q4. “It’s clear that ransomware attacks are on a record-setting pace for 2023, and based on activity at the end of Q3 and early Q4, we fully expect these numbers to surpass anything we have witnessed in previous years,” said Jason Rebholz, CISO, Corvus Insurance. “Aside from these overall numbers, this report demonstrates the impact that a single ransomware group like CL0P can have when they invest in new tactics, which is what we saw with the mass zero-day exploit that wreaked havoc over the second and third quarters.” In Q2, the CL0P ransomware group’s use of a zero-day vulnerability in MOVEit file transfer software accounted for 13% of all ransomware victims in Q3. But even without CL0P activity, Q3 would still be a 5% increase in ransomware over Q2 and a 70% increase year over year, showing that ransomware activity is rising even independent of CL0P’s substantial percentage. Some of the more frequently targeted industries include law firms (up 70%), municipalities (up 95%) and oil and gas (up 142%). Other top targets include manufacturing firms (up 60%). But few industries remain untouched by ransomware threats. Telecommunications, hospitality, retail, real estate and transportation, logistics and storage have all seen double-digit increases each quarter in 2023. To combat attacks, 40 countries in a U.S.-led alliance plan to sign a pledge to never pay ransom to cybercriminals and to work toward eliminating the hackers’ funding mechanism. The International Counter Ransomware Initiative aims to eliminate the criminals’ funding through better information sharing about ransom payment accounts. Two information-sharing platforms will be created, one by Lithuania and another jointly by Israel and the UAE. Partner countries will share a “black list” through the U.S. Department of Treasury that will include information on digital wallets being used to move ransomware payments. “As long as there is money flowing to ransomware criminals, this is a problem that will continue to grow,” said Anne Neuberger, U.S. deputy national security adviser in the Biden administration for cyber and emerging technologies, when announcing the alliance in October.

‘It’s clear that ransomware attacks are on a recordsetting pace for 2023…’

Andrea Wells V.P. of Content

6 | INSURANCE JOURNAL | NOVEMBER 20, 2023

Chief Financial Officer Terry Freeburg | tfreeburg@wellsmedia.com Circulation Manager Elizabeth Duffy | eduffy@wellsmedia.com Staff Accountant Sarah Kersbergen | skersbergen@wellsmedia.com

EDITORIAL

V.P. of Content Andrea Wells | awells@insurancejournal.com Executive Editor Emeritus Andrew Simpson | asimpson@wellsmedia.com National Editor Chad Hemenway | chemenway@insurancejournal.com Southeast Editor William Rabb | wrabb@insurancejournal.com South Central Editor/Midwest Editor Ezra Amacher | eamacher@insurancejournal.com West Editor Don Jergler | djergler@insurancejournal.com International Editor L.S. Howard | lhoward@insurancejournal.com Content Editor Allen Laman | alaman@wellsmedia.com Assistant Editor Jahna Jacobson | jjacobson@insurancejournal.com Copy Editor Stephanie Jones | sjones@insurancejournal.com Columnists & Contributors Contributors: Jeff Menary, John Nosari, Chris Prentice, Nate Raymond, Raphael Satter, Jim Sams, Susanne Sclafane, Jonathan Stempel, Peter Taffee, Trent Warner, Daniel Wiessner Columnists: Chris Burand, Tony Caldwell, Bill Wilson

SALES / MARKETING

Chief Marketing Officer Julie Tinney | jtinney@insurancejournal.com West Sales Dena Kaplan | dkaplan@insurancejournal.com Romeo Valdez | rvaldez@insurancejournal.com Kelly DeLaMora | kdelamora@wellsmedia.com South Central Sales Mindy Trammell | mtrammell@insurancejournal.com Southeast and East Sales (except for NY, PA, CT) Howard Simkin | hsimkin@insurancejournal.com Midwest Sales Lisa Whalen | (800) 897-9965 x180 East Sales (NY, PA and CT only) Dave Molchan | (800) 897-9965 x145 Advertising Coordinator Erin Burns | eburns@insurancejournal.com Insurance Markets Manager Kristine Honey | khoney@insurancejournal.com Sr. Sales & Marketing Coordinator Laura Roy | lroy@insurancejournal.com Marketing Administrator Alberto Vazquez | avazquez@insurancejournal.com Marketing Director Derence Walk | dwalk@insurancejournal.com

DESIGN / WEB / VIDEO

V.P. of Design Guy Boccia | gboccia@insurancejournal.com Web Team Lead Josh Whitlow | jwhitlow@insurancejournal.com Ad Ops Specialist Jeff Cardrant | jcardrant@insurancejournal.com Web Developer Terrance Woest | twoest@wellsmedia.com Web Developer Jason Chipp | jchipp@wellsmedia.com Digital Content Manager Ashley Cochrane | acochrane@insurancejournal.com Videographer/Editor Ashley Waldrop | awaldrop@insurancejournal.com

ACADEMY OF INSURANCE

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Outside the US, call (847) 400-5951 Insurance Journal, The National Property/Casualty Magazine (ISSN: 00204714) is published 22 times annually by Wells Media Group, Inc., 3570 Camino del Rio North, Suite 100, San Diego, CA 92108-1747. Periodicals Postage Paid at San Diego, CA and at additional mailing offices. SUBSCRIPTION RATES: $7.95 per copy, $12.95 per special issue copy, $195 per year in the U.S., $295 per year all other countries. DISCLAIMER: While the information in this publication is derived from sources believed reliable and is subject to reasonable care in preparation and editing, it is not intended to be legal, accounting, tax, technical or other professional advice. Readers are advised to consult competent professionals for application to their particular situation. Copyright 202 Wells Media Group, Inc. All Rights Reserved. Content may not be photocopied, reproduced or redistributed without written permission. Insurance Journal is a publication of Wells Media Group, Inc. POSTMASTER: Send change of address form to Insurance Journal, Circulation Dept, PO Box 708, Northbrook, IL 60065-9967 ARTICLE REPRINTS: Contact (800) 897-9965 x125 or visit insurancejournal.com/reprints

News & Markets S&P: Struggles in Personal Auto Insurance to Subside More Slowly Than Expected

By Allen Laman

&P Global Market Intelligence projects that personal auto results will improve from 2022’s worst-indecades combined ratio of 112.2%, though not as rapidly as the organization’s experts previously expected. Continued pressure on claim severity across coverages has prolonged post-pandemic recovery for the personal auto business, and carriers will continue to implement large rate increases in the near term, S&P GMI shared in its latest U.S. Auto Insurance Market Report. Tim Zawacki, principal insurance analyst at S&P Global Market Intelligence, said that the company’s “revised forecast for 2023 direct premiums written growth of 15.9% would easily surpass the previous 25-year8 | INSURANCE JOURNAL | NOVEMBER 20, 2023

high rate of increase of 10.2% in 2003.” “The post-pandemic return to normalcy has played out differently than most market participants envisioned,” he said. “Stubbornly elevated crash severity has defied the longer-term trend, reflecting secular changes in working patterns and other factors that have resulted in more wrecks occurring at higher rates of speed.” Zawacki said increases in severe auto crashes have precipitated a rise in litigated claims, which drive up costs. Severe weather and a surge in vehicle thefts have resulted in higher losses in comprehensive coverage. The industry has responded aggressively to deteriorating results with multiple rounds of sizable rate increases, he noted, but carriers’ ability to realign rates to reflect higher loss costs varies widely by geography.

“We continue to expect that they will eventually succeed in that initiative albeit over a longer timeline and with greater increases in premium rates than we had previously envisioned,” he said. The 2024 S&P GMI outlook for direct premiums written growth of nearly 9.1% in the personal auto business contemplates a continued tailwind from rate increases, particularly in states such as California, where pricing actions significantly lagged the onset of the claims severity spike. Beyond 2024, S&P GMI expects written premium growth rates to revert rapidly toward long-term historical averages in the mid-single digits, as experts anticipate that the predominance of six-month policy terms among most of the largest carriers will facilitate catching up to loss costs. INSURANCEJOURNAL.COM

News & Markets Largest Decline Ever in Agency M&A Through First Three Quarters: OPTIS

Insurance Agency Mergers and Acquisitions YTD Plunge

nvestment banking and financial firm OPTIS Partners said the count of agency mergers and acquisitions through the first three quarters of 2023 saw the largest declined ever recorded. There were 534 announced M&A deals of U.S. and Canada property/casualty insurance agencies through Sept. 30 – down 27% from 720 in 2022, according to the firm’s M&A database. There were 168 transactions in the third quarter, 34% lower than the same period in 2022. Steve Germundson, partner of OPTIS Partners, said the slowdown was due to “rising costs of capital, the increase in leverage, and a smaller supply of business owners.” Broadstreet Partners and Hub International led all buyers with 43 and 37 transactions year-to-date, respectively. Other top buyers were Inszone Insurance Services and Leavitt Group at 27 deals apiece, World Insurance Associates at 24, and Arthur J. Gallagher at 25. No other buyer reported more than 25

transactions in 2023. Perennial deal-count leaders Acrisure and PCF Insurance slowed deal activity dramatically. Combined they did 81% fewer transactions than in 2022. Though the “M&A bubble has deflated,

Active Acquirers With 15 or More Deals in 2023

Source: Optis Partners INSURANCEJOURNAL.COM

according to OPTIS, partner Dan Menzer said “there are still a lot of deals being done and a number of buyers likely not strapped with debt are upping their deal flow.” We continue to see valuations holding, especially for attractive sellers,” said Tim Cunningham, managing partner. “The economic change of rising interest rates and a reduction in the supply of sellers has fundamentally changed the value proposition that the insurance distribution business represents. It has not reduced the demand from a still robust group of buyers. We expect the valuation environment to hold rather steady, though we could see that soften slightly for less attractive firms over the coming quarters.” The private equity-backed/hybrid group of buyers did 67% of all transactions so far in 2023. Property/casualty-only agencies accounted for 62% of the total transactions through the first three quarters of 2023. NOVEMBER 20, 2023 INSURANCE JOURNAL | 9

Figures

534

The number of M&A deals of U.S. and Canada property/casualty insurance agencies announced through Sept. 30 — down 27% from 720 for the same period in 2022, according to investment banking and financial firm OPTIS Partners’ M&A database. There were 168 transactions in the third quarter, 34% lower than the same period in 2022. Steve Germundson, partner of OPTIS Partners, said the slowdown was due to “rising costs of capital, the increase in leverage, and a smaller supply of business owners.”

$328 Million The amount Uber and Lyft, combined, will pay to settle claims by New York Attorney General Letitia James that the ride-sharing companies systematically cheated drivers out of pay and benefits. James said Uber will pay $290 million and Lyft will pay $38 million to resolve her office’s multi-year investigation into the companies, calling it the largest wage theft settlement in her office’s history. Drivers will also be guaranteed minimum hourly rates and paid sick leave. More than 100,000 current and former drivers in the state are eligible to benefit from the settlements.

7.1

Million

The dollar amount Chicago-based Conagra Brands was ordered by an Illinois jury to pay to a Pennsylvania woman who was badly injured in 2017 when a can of commercial brand cooking spray ignited in a kitchen at her workplace and set her aflame. The verdict, issued in favor of Tammy Reese of Shippensburg, Pennsylvania, is the first of numerous other cases from burn victims across the country with similar stories citing accidents that occurred with Conagra-made cooking spray brands, including its popular grocery store brand Pam. 10 | INSURANCE JOURNAL | NOVEMBER 20, 2023

$20 Million The California FAIR Plan Association is offering increased commercial coverage of up to $20 million per location. Prior to the adjustment, the maximum limits for commercial coverage were $8.4 million per location. Business owners policy property coverage limits will also increase to $20 million, effective December 14.

INSURANCEJOURNAL.COM

Declarations Ransomware Payments

Pennsylvania Gas Explosion

Predatory Landlords

“As long as there is money flowing to ransomware criminals, this is a problem that will continue to grow.” — Anne Neuberger, U.S. deputy national security adviser for cyber and emerging technologies, told reporters after 40 countries in a U.S.-led alliance agreed to sign a pledge never to pay ransom to cybercriminals and to work toward eliminating the hackers’ funding mechanism. The International Counter Ransomware Initiative comes as the number of ransomware attacks grows worldwide. The United States accounts for 46% of such attacks.

“Every citizen deserves to feel safe in their own homes, unaffected by the environmental hazards created by large corporations.” — Pennsylvania Attorney General Michelle Henry said after charges were filed against a company over a natural gas explosion that leveled a house and injured a western Pennsylvania family five years ago. The criminal complaint alleges methane gas in an underground storage reservoir owned and operated by Equitrans L.P. migrated upward into a deteriorating company storage well and eventually reached the Greene County home, leading to the blast on Halloween in 2018. All three family members sustained burns and the house was destroyed.

“Despite the issues with predatory landlords in north Minneapolis being widely known, the City of Minneapolis has consistently failed to take action.” — States a lawsuit accusing the city of Minneapolis of discrimination by lax housing code enforcement, especially for rental properties in a part of the city with high populations of people of color. The lawsuit was filed on behalf of eight current and former residents of the city’s north side. It seeks to force the city to assign more housing code inspectors to north Minneapolis, where residents have for years complained of landlords who allow properties to fall into disrepair but face few consequences. No financial settlement is being sought.

Contractor Fined for Fatal Fall

Financial Opportunity?

United Airlines Sued

“The risks of serious and fatal injuries for people working at these heights are well-known and no step should ever be overlooked during the process of inspecting the worksite for hazards.” — Jessica Bookman, acting area director for the U.S. Occupational Safety and Health Administration, said after finding that a Louisiana contractor failed to use correct safety equipment that would have prevented a fatal fall at an electric car plant construction site in Georgia. OSHA fined Eastern Contractors Inc., based in Geismar, Louisiana, the maximum allowed by federal law – $160,724 – after Victor Javier Cajija Gamboa fell 60 feet to his death in April.

INSURANCEJOURNAL.COM

“What a great financial opportunity. Except, oops, it sure sounds like they’d be making money on the backs of suffering homeowners, their constituents.” — Stated an editorial in the Miami Herald after Florida state Sen. Joe Gruters, R-Sarasota, reportedly pitched investment opportunities in a startup property insurance company in Florida. The Herald and the Tampa Bay Times reported that Gruters, an accountant by trade, sent potential investors, including some fellow lawmakers, information on startup Village Protection Insurance, promising potential returns of 165% over five years.

“United fosters an environment of inclusion and does not tolerate discrimination of any kind. We believe this lawsuit is without merit and intend to defend ourselves vigorously.” — United Airlines said in a statement after being sued by two longtime flight attendants who say they were excluded from highly coveted assignments to work on charter flights for the Los Angeles Dodgers baseball team because of their racial background and age. In a complaint filed with the Los Angeles County Superior Court, Dawn Todd and Darby Quezada said they were passed over in favor of flight attendants who were “white, young, thin women who are predominately blond and blue-eyed,” and fit a “certain look” that the Dodgers players liked.

NOVEMBER 20, 2023 INSURANCE JOURNAL | 11

News & Markets SEC Sues SolarWinds for Concealing Risks Before Massive Hack By Chris Prentice, Jonathan Stempel and Raphael Satter

he U.S. Securities and Exchange Commission on October 30 sued software company SolarWinds Corp. and its top information security executive, saying they defrauded investors by hiding cybersecurity weaknesses during a massive hack targeting the U.S. government. The SEC lawsuit in Manhattan federal court accused SolarWinds and Timothy Brown, its chief information security officer (CISO), with repeatedly violating U.S. securities laws by concealing vulnerabilities and cyber events in regulatory filings and other company statements. The lawsuit appears to be the first time the SEC has sued a company that has been victim of a cyberattack, rather than charging and simultaneously settling. SolarWinds, based in Austin, Texas, slammed the regulator’s “overreach” and pledged to fight the charges in court. It said the charges were “unfounded,” put national security at risk, and “should alarm all public companies and committed cybersecurity professionals across the country.” Chief Executive Sudhakar Ramakrishna said in a blog post: “The SEC’s charges now risk the open information-sharing across the industry that cybersecurity experts agree is needed for our collective security.” Alec Koch, a lawyer for Brown, said his client performed his job with “diligence, integrity and distinction,” and looked forward to defending his reputation and correcting the inaccuracies in the SEC complaint. Shares of SolarWinds fell more than 3% after market hours, following the filing of the lawsuit.

‘I Want to Throw Up’

The nearly two-year hacking known as Sunburst, the outlines of which were first reported by Reuters, was one of the most sweeping cyber intrusions ever discovered. Hackers were able to use SolarWinds’ flagship network management software, 12 | INSURANCE JOURNAL | NOVEMBER 20, 2023

Orion, as a springboard into U.S. government networks and international targets. Several federal agencies were compromised, including the Departments of State, Treasury, Homeland Security, Commerce and Energy. The full consequences of the breach, some hidden behind layers of classification, remain unknown. Regulators found SolarWinds misled the public about repeated cybersecurity risks it faced between its 2018 initial public offering and its December 2020 disclosure about the attack. Authorities said Brown internally discussed known risks and vulnerabilities but painted a starkly different portrayal to the public, even as customers, including a federal agency, alerted SolarWinds to malicious activity on its flagship software.

According to the SEC, the problems prompted one SolarWinds employee to say in October 2020: “We’re so far from being a security minded company. Every time I hear about our head geeks talking about security I want to throw up.” Alexander Urbelis, a cybersecurity lawyer at Crowell & Moring LLP, said authorities have become more attentive to holding executives liable for cybersecurity failures. He cited the October 2022 obstruction conviction of a former Uber Technologies security chief for covering up a data breach. “That was a massive wakeup call for CISOs across the board,” Urbelis said.

News & Markets Global Insurance Prices Continue to Stabilize in Q3 as US Cyber Premiums Drop: Marsh

lobal commercial insurance prices increased 3% in the third quarter of 2023, the same as the prior quarter, according to the Global Insurance Market Index released by insurance broker Marsh, a business of Marsh McLennan. The third quarter marks the 24th consecutive quarter of pricing increases, continuing the longest run of increases since the inception of the index in 2012, said Marsh, noting that increases peaked at 22% in the fourth quarter of 2020. Average pricing continued to be relatively consistent across almost all regions during Q3, which, similar to Q2, was driven largely by a continuation of the trend for rate decreases in financial and professional lines and a small decrease for prices in the cyber insurance market, Marsh explained. This was offset by property insurance increases, most notably in the U.S. where property prices rose on average by 14%, Marsh said. Composite pricing regionally ranged from a decrease of 1% in the UK and in Canada, to an increase of 10% in the Latin America and Caribbean regions. Property insurance experienced increases in every region, while cyber and financial and professional lines pricing generally decreased or showed moderating increases, Marsh said. In the U.S., composite prices rose overall by 4% on average, the same as the previous two quarters. In Latin America and the Caribbean, pricing increased by 10% (up from 8% in Q2), in Europe by 4% (down from 5% in Q2), by 1% in Pacific (down from 2%) and was flat in Asia (the same as in Q2). In the UK, composite pricing decreased by 1% (compared to a 1% increase in Q2). For the first time, the Marsh Global INSURANCEJOURNAL.COM

Insurance Market Index is separately reporting results for Canada (where prices in Q3 decreased by 1%), and India, Middle East and Africa, which recorded an increase of 3%. Previously, these results were included in aggregate data, but not broken out. Globally, average pricing for the four major product lines in Q3 was as follows: • Property insurance: +7% (+10% in Q2 2023) • Casualty insurance: +3% (+3% in Q2 2023) • Financial and professional lines insurance: -6% (-8% in Q2) • Cyber insurance: -2% (+1% in Q2). Other findings included: • Cyber insurance pricing continued to

decrease in the U.S., declining 6% in the quarter, compared to a 4% decrease in the prior quarter. • For the fifth consecutive quarter, overall average pricing for financial and professional lines fell, driven by rate reductions and additional capacity — particularly in the UK. • Q3 was the first quarter to record an average decrease in cyber prices since the second half of 2018. • Insurers in most regions remain concerned about the impact of inflation on asset values and claims costs during renewal discussions. • Ransomware claims continued to rise in many regions. “After years of increases, even a modest reduction in cyber rates will be welcomed by clients and in large part is recognition of the hard work they have done to improve their cyber resilience,” commented Pat Donnelly, president, Marsh Specialty and Global Placement, in a statement accompanying the report. “However, the property market — and property catastrophe in particular — remains challenging and is an area of focus of our work with clients,” he added.

Global Insurance Composite Pricing Change During Q3

Source: Marsh Specialty and Global Placement NOVEMBER 20, 2023 INSURANCE JOURNAL | 13

News & Markets 5 Brokers Report Strong Revenues During Q3 as Favorable Market Climate Continues By L.S. Howard

ive publicly traded insurance brokers reported strong third quarter revenues, with their executives using adjectives such as “outstanding,” “terrific,” “excellent,” and “strong” to describe their companies’ financial performances. In a wrap-up of the brokers’ results, listed in descending order by revenue size, Marsh McLennan Cos. comes first, followed by Aon, Arthur J. Gallagher, WTW and Brown & Brown.

Marsh McLennan

Marsh McLennan reported Q3 consolidated revenue of $5.4 billion, an increase of 13% compared with the third quarter of 2022. On an underlying (non-GAAP) basis, revenue increased 10%. Operating income was $996 million, an increase of 26% from a year ago. Net income attributable to the company was $730 million, or $1.47 per diluted share, compared with $546 million, or $1.08 per share in the third quarter of 2022. “Marsh McLennan’s third quarter results were outstanding, reflecting strength across the business. We had another quarter of double-digit underlying revenue growth, strong adjusted EPS growth and margin expansion. We achieved these results while also continuing to make significant investments for the future,” commented John Doyle, president and CEO. “With our performance through the third quarter, we are on track for another terrific year.” Marsh McLennan’s Risk and Insurance Services (RIS) segment (Marsh and Guy Carpenter) reported a Q3 revenue of $3.2 billion, an increase of 11% on an underlying basis. Operating income rose 21% to $640 million, and adjusted operating income was $671 million, an increase of 19% from a year ago. Breaking down the results of the two 14 | INSURANCE JOURNAL | NOVEMBER 20, 2023

RIS units, Marsh’s revenue in the third quarter was $2.7 billion, an increase of 8% on an underlying basis. In U.S./Canada, underlying revenue rose 6%. International operations produced underlying revenue growth of 10%, reflecting 14% growth in Latin America, 10% growth in Asia Pacific, and 9% growth in EMEA. Guy Carpenter’s revenue in the third quarter was $359 million, an increase of 8% on an underlying basis. “Overall, we remain on track for a terrific 2023. Based on our outlook today and assuming current conditions persist, we expect to generate 9% to 10% full-year underlying revenue growth, strong growth in adjusted EPS and to report margin expansion for the 16th consecutive year,” said Mark McGivney, MMC’s chief financial officer

during the recent earnings call to discuss Q3 results.

Aon plc

Aon reported total revenue increased by $257 million, or 10%, to $3.0 billion from $2.7 billion in Q3 2022. The Q3 2023 total included organic revenue growth of 6%, which was attributed to ongoing strong retention, management of the renewal book, and net new business generation, a 2% favorable impact from fiduciary investment income, and a 2% favorable impact from foreign currency translation. Q3 2023 operating income rose by 17% to $691 million from $590 million during the same period last year. Net income attributable to Aon shareholders increased 12% to $456 million, or $2.23 per share on a diluted basis, compared to $408 million, or $1.92 per share on a diluted basis, in the prior year period. INSURANCEJOURNAL.COM

Aon’s Reinsurance Solutions unit delivered another very strong quarter of 11% organic revenue growth, driven by strong growth across treaty, facultative and the Strategy and Technology Group, according to Greg Case, Aon CEO, during the Q3 earnings’ call with financial analysts. The Reinsurance Solutions unit reported Q3 revenue of $465 million, compared with $396 million during Q3 2022. Aon’s Commercial Risk unit reported Q3 revenue of $1.6 billion, compared with $1.5 billion during Q3 2022. The Q3 2023 figure included organic revenue growth of 4%, which reflected strong renewals and net new business internationally in EMEA and the Pacific, the company said.

Arthur J. Gallagher & Co.

Arthur J. Gallagher’s total revenue before reimbursements for brokerage and risk management, rose 21.9% to $2.45 billion in the third quarter from $2.01 billion in Q3 2022. “We had an excellent third quarter,” commented Patrick Gallagher Jr., chairman, president and CEO of Arthur J. Gallagher & Co., in the company’s earnings statement. “Our core brokerage and risk management segments combined posted 22% reported revenue growth, 10.5% organic revenue growth, a 15.5% reported net earnings margin, and we improved our adjusted EBITDAC margin by 78 basis points. Also, during the quarter, we completed 12 new mergers with approximately $57 million of estimated annualized revenue.” (Editor’s note: EBITDAC means Earnings Before Interest, Taxes, Depreciation, Amortization and Coronavirus.) “Brokerage organic growth of 9.3% came in a touch above the 9% expectation due to Reinsurance (+20%) and Global Specialty (+18%) coming in better-than-expected,” according to Wells Fargo Equity Research. “Risk Management organic was 17.9% also above the 15-16% guide. Further, Gallagher reaffirmed its outlook for both INSURANCEJOURNAL.COM

businesses for FY 2023 with Brokerage growth expected to be ~9% and Risk Management above 15%. For 2024 Brokerage organic should be 7-9% with Risk Management at 9-11%,” Wells Fargo continued.

WTW

Willis Towers Watson (WTW) reported Q3 revenue increased 11% to $2.2 billion ($2 billion in Q3 2022), with organic growth of 9%. Net income for the third quarter of 2023 was $139 million, a decrease of 28% compared to net income of $192 million in the prior-year third quarter. “As I touched on last quarter, our focus on specialization and our risk and broking segment has been one of the key drivers of our strong organic growth. We’ve generated substantial momentum by developing innovative products and services, engaging in strategic partnerships, and building platforms like MGAs, MGUs, and affinity products,” said Carl Hess, CEO and director of WTW, during the company’s earnings call. WTW’s Risk & Broking segment’s revenue was up 10% on both an organic and constant currency basis compared to the prior year of third quarter. R&B’s Q3 operating income was $134 million, compared with $105 million for the same period last year. R&B had revenue of $855 million in Q3 2023, an increase of 12% (10% increase constant currency and organic) from $765 million in the prior year. Corporate Risk & Broking generated solid organic revenue growth of 10%, driven by strong new business, improved client retention and rate increases. Q3 growth was driven by continued strong return on investment in our specialty lines, said Andrew Krasner, WTW’s CFO, during the earnings call.

“Globally, the strongest growth came from our facultative, financial solutions, natural resources, surety and construction lines of business.” Europe also had an “exceptional quarter with double digit growth in a number of countries led by our P&C retail and direct business, as well as construction, aerospace and financial solutions. International also contributed to strong organic growth led by Latin America,” Krasner said. He said North America benefited from “strong new business and increased client retention across most lines of business, despite headwinds in our M&A business and from the impact of book of business [settlement] activity.”

Brown & Brown

Brown & Brown reported Q3 revenue of $1.07 billion, increasing by $140.1 million, or 15.1%, from $927.6 million in Q3 2022. Organic revenue increased by 9.6% during the quarter. “We delivered an outstanding performance in the third quarter,” Powell Brown, Brown & Brown’s president and chief executive officer, said during the company’s Q3 earnings call. Net income was $175.9 million, increasing $14.8 million, or 9.2%, from $161.1 million in Q3 2022. Diluted net income per share increased to $0.62, or 8.8%, from $0.57 in the same period last year. “Our retail segment had another great quarter and delivered organic growth of 8%. This growth, both domestically and internationally, was driven by strong new business, good retention and continued rate increases. We’re winning a lot of new business by leveraging our collective capabilities and creating innovative solutions for our customers that are searching for ways to manage their cost of insurance,” Powell Brown said. On the M&A front, Brown & Brown completed seven acquisitions with estimated annual revenues of $14 million. NOVEMBER 20, 2023 INSURANCE JOURNAL | 15

Business Moves current location and operate as part of Gallagher Agency Alliance under the direction of Jen Tadin, managing director of Gallagher’s Global Small Business practice. Gallagher Agency Alliance is a newly-launched merger and acquisitions model targeting agencies that specialize in small business property/casualty insurance and employee benefits. Arthur J. Gallagher is a global insurance brokerage headquartered in Rolling Meadows, Illinois.

National

Arthur J. Gallagher, Clements Worldwide

Global insurance broker Arthur J. Gallagher & Co. has acquired Washington, D.C.-based Clements Worldwide. Clements is an international insurance broker serving expats, diplomats and military personnel, as well as offering commercial coverages for nonprofits, contractors, embassies and schools. In addition to its Washington, D.C., office, Clements operates out of London, Dublin, Gibraltar and Dubai. Jon Clements and his team will remain in their current locations under the direction of Bumpy Triche, head of Gallagher’s Mid-South retail property/casualty brokerage operations. Arthur J. Gallagher & Co. is headquartered in Rolling Meadows, Illinois, and operates in approximately 130 countries.

Arthur J. Gallagher, Cadence Insurance

Arthur J. Gallagher & Co. signed a definitive agreement with Cadence Bank to acquire Cadence Insurance Inc. for $904 million cash. Baton Rouge, Louisiana-headquartered Cadence Insurance offers a suite of commercial property/casualty, employee benefits, and personal lines products to clients from 34 offices in nine different states across the Southeast, including Texas. The Cadence Insurance team of about 800 led by Markham McKnight and Chris Boone will operate under the direction of Bumpy Triche, head of Gallagher’s MidSouth retail property/casualty brokerage 16 | INSURANCE JOURNAL | NOVEMBER 20, 2023

operations and Robby White, head of Gallagher’s South-Central region employee benefits consulting and brokerage operations. The acquisition is expected to close during the fourth quarter, pending regulatory approval. Gallagher will become the preferred insurance broking partner of Cadence Bank.

East

Lawley, Shoff Darby Companies

Buffalo, New York-based independent agency Lawley has acquired Connecticutbased Shoff Darby Companies Inc. Through the transaction, Lawley will add four locations and 75 employees in Connecticut, as well as increase insurance and benefit products and services available to clients. Lawley has a team of more than 500 associates offering property, casualty, surety and benefits insurance programs. It has branch offices across New York and in New Jersey. Founded in 1887, Shoff Darby has offices in Norwalk, Shelton, Stamford and North Haven, Connecticut.

Arthur J. Gallagher, Rosenzweig Insurance Agency

Arthur J. Gallagher & Co. has acquired Mineola, New York-based Rosenzweig Insurance Agency Inc., an insurance broker with pharmacy expertise serving small and medium-sized businesses. Larry Rosenzweig, Lynn Rosenzweig Derby and their team will remain in their

RMS Insurance Brokerage, Clancy & Clancy Brokerage

RMS Insurance Brokerage LLC has acquired Garden City, New York-based Clancy & Clancy Brokerage LTD (C&C). An independent insurance agency founded in 1956 by the late Maureen and Cummin Clancy, C&C offers commercial and personal lines insurance throughout the New York region. Principal Maura Clancy said that joining RMS companies will accelerate the agency’s “growth and operational capabilities.” She will report to Mark D. Derrenberger, president and CEO of RMS. RMS Insurance Brokerage, which is also headquartered in Garden City, serves as a nationwide managing general agent, wholesale broker, risk management consultant, and claims administrator.

Risk Strategies, Fairmount Benefits Co.

Boston-based national specialty insurance broker Risk Strategies has acquired Fairmount Benefits Co., a Philadelphiabased specialty firm focused on employee benefit programs and technology for corporate employers. Fairmount Benefits has established specializations in funding mechanisms, pharmacy cost management, benefit technologies and employee engagement. A woman-owned business, Fairmount Benefits was established in 2020 when founders and long-term Megro Benefits Co. employees Cheryl Kiley and Ronnie Beth Stanley bought out and rebranded the firm. In addition to their 20-year tenure with Megro benefits, Kiley and Stanley also have experience in corporate healthcare and pharmaceuticals. INSURANCEJOURNAL.COM

At Megro Benefits, the firm historically served clients in the southeastern Pennsylvania, New Jersey and New York regions. Following the buyout and rebranding to Fairmount Benefits, the firm expanded its reach and now serves clients throughout the country and across a range of industries.

Midwest

Arthur J. Gallagher, Meadowbrook Insurance Agency

Arthur J. Gallagher & Co. acquired the assets of Southfield, Michigan-based Meadowbrook Insurance Agency. Meadowbrook Insurance Agency is a retail insurance broker offering a comprehensive range of property/casualty and group benefits services to clients throughout Michigan and in Florida. As part of the transaction Gallagher will acquire affiliated companies The Protection Center, based in Jackson, Michigan, and Kleinschmidt Agency Inc., based in Ann Arbor, Michigan. The Meadowbrook Insurance Agency team will operate under the direction of Sean Gallagher, head of Gallagher’s Great Lakes region retail property/casualty brokerage operations, and Tom Lannen, head of Gallagher’s Midwest region employee benefits consulting operations.

Alera Group, Rick Young Insurance

Alera Group has acquired Rick Young Insurance, an insurance agency offering employee benefits services including health insurance, life insurance, Medicare and Medicaid redetermination. Rochester Hills, Michigan-based Rick Young Insurance offers personalized employee benefits services. This includes tailored health insurance coverage encompassing outpatient care, emergency, maternity care, prescriptions, and preventative services. The agency also provides complimentary Medicare consultations and assists customers in navigating their Medicare plans and determining if supplemental insurance is necessary. The Rick Young Insurance team will continue serving clients in their existing roles. INSURANCEJOURNAL.COM

Ryan Specialty, AccuRisk Holdings

Ryan Specialty signed a definitive agreement to acquire AccuRisk Holdings LLC, a medical stop loss managing general underwriter. AccuRisk is headquartered in Chicago and was founded in 2017. It generated approximately $25 million of revenue for the 12 months ended July 31, 2023. The acquisition is expected to close in December 2023. Ryan Specialty is a specialty insurance firm based in Chicago.

South Central

Higginbotham, Bourg Insurance

Higginbotham has joined forces with Bourg Insurance, a long-term family business with deep ties to the South Louisiana community. Founded in 1958 by Claude “Toby” Bourg, Jr. and his wife Edith, Bourg Insurance is a personal and commercial property and casualty, life and health insurance agency located in Donaldsonville, Louisiana, with additional offices in Prairieville, Chauvin and Baton Rouge, Louisiana. Now a Higginbotham partner agency, Bourg Insurance is run by Toby and Edith’s sons, Brad and Brennan, and son-in-law Chuck Leblanc, as a family and community-oriented business with a strong emphasis on personal lines and small to middle market companies in the real estate, restaurant and construction sectors, among others.

Southeast

TWFG Insurance, Jeff Kincaid Insurance Agency

TWFG Insurance, also known as The Woodlands Financial Group, has acquired the Jeff Kincaid Insurance Agency, which has five offices in North Carolina. Kincaid, a former Nationwide Mutual Insurance agent, has offices in Hickory, Shelby, Morgantown, Forest City and Marion, North Carolina. TWFG is headquartered in The Woodlands, Texas, and was founded in 2001 by Gordy Bunch, CEO.

West

Brown & Brown, Pacific Underwriters

A subsidiary of Brown & Brown Inc. has acquired substantially all of the assets of Pacific Underwriters. Following the acquisition, the Pacific Underwriters team will continue doing business from their existing Seattle, Washington, location as part of Brown & Brown’s national programs segment. Pacific Underwriters acts as a program manager on behalf of certain public utility insurance risk pools in Washington. It also offers insurance services for dental practitioners in the Pacific Northwest. Brown & Brown is an insurance brokerage firm with roughly 500 locations worldwide.

USI Insurance Services, Cavanah Associates

USI Insurance Services acquired Honolulu, Hawaii-based Cavanah Associates Inc., an independent brokerage firm specializing in commercial and personal risk insurance programs. USI is an insurance brokerage and consulting firm offering property/casualty, employee benefits, personal risk, program and retirement services to large risk management clients, middle market companies, smaller firms and individuals.

White Mountains Insurance Group, Bamboo Ide8 Insurance Services

White Mountains Insurance Group Ltd. has agreed to acquire a majority stake in Bamboo Ide8 Insurance Services LLC (Bamboo), an MGA focused on the California homeowners insurance market. White Mountains expects to invest roughly $285 million, including primary capital to support Bamboo’s growth, and to acquire roughly 70% of Bamboo basic shares outstanding. Bamboo, launched in 2018 by John Chu, provides homeowners’ insurance for more than 100,000 California policyholders using a technology-enabled underwriting platform to select and manage risk. The transaction is expected to close in the first quarter of 2024, subject to regulatory approvals and other customary closing conditions. NOVEMBER 20, 2023 INSURANCE JOURNAL | 17

People National

Bermudabased Aspen

Insurance Holdings Ltd. appointed Bobby Bianconi

Bobby Bianconi

global head of Cyber. Bianconi has been with Aspen since 2016 and brings over 10 years of dedicated underwriting experience, most recently as head of U.S. Cyber. Prior to joining Aspen, Bianconi led the cyber portfolio for the Western United States at Allied World. He is based in Rocky Hill, Connecticut.

WTW appointed Karen Beldy Torborg to serve in a dual

role as head of Strategic Growth & Portfolio Management and head of Large Karen Beldy Torborg Accounts segment within Corporate Risk and Broking (CRB), North America (NA). Beldy Torborg brings tremendous depth of relevant experience to WTW, with a career spanning over 30 years, particularly in M&A and private equity, while also focusing on strategic business development and client-centricity. Most recently, Beldy Torborg served as the global engagement partner at Marsh. She is based in New York.

Berkshire Hathaway Specialty Insurance (BHSI) promoted Angela Meyer to

head of Product Liability in North America. She was previously head of Life Sciences in North America.

Meyer joined BHSI in 2014 as senior underwriter, casualty, and has held a Angela Meyer succession of increasingly senior positions in BHSI’s casualty organization in North America. She has more than 20 years of insurance industry experience.

W. R. Berkley Corp. appointed

John J. Forte

president of Berkley Public Entity, John Forte a Berkley Company. Forte joined Berkley Public Entity as senior vice president, chief underwriting officer and chief operating officer in 2018. He has over 20 years of experience in the property/ casualty insurance industry.

Broker Hub International added Eric Showalter as senior vice president and head of service and client experience for Hub Private Client. Showalter previously was head of service delivery and customer experience for CareFirst Blue Cross Blue Shield.

CRC Group, a North American wholesale specialty insurance distributor, announced three new executive appointments. Jessica Marshall was appointed chief marketing officer. Marshall has served as CRC Group’s senior vice president and director of marketing since 2018. She will now oversee all aspects of communication,

18 | INSURANCE JOURNAL | NOVEMBER 20, 2023

advertising, public relations, as well as sales and producer development programs. Mike Baeurle was appointed chief client officer. Baeurle previously served as the company’s executive vice president of agency distribution after joining CRC Group with the acquisition of Swett & Crawford in 2016. Baeurle will lead CRC Group’s retail agency distribution and business development strategy and manage client relationships across CRC Group’s three operating divisions. Curtis Moore has been appointed chief administrative officer. Moore joined CRC Group in 2018 and has held a variety of key roles across the company. In his new position, Moore will be responsible for all administrative and operational functions in addition to the development and execution of corporate strategic performance initiatives, including business process improvements, technology advancements, and other key priorities.

BMS Group appointed Andras Bohm head of its U.S. capital advisory business and the CEO of BMS Capital Advisory Inc. (BMS Groups’ U.S. broker-dealer). Bohm will lead the broker’s investment banking and legacy solutions team in New York. Bohm joins BMS from Swiss Re Capital Markets, where he led the team’s structuring activities in the Americas. Ascot Group named Pat Stoik executive vice president, head of marine, Ascot U.S. He is based in New York. Stoik brings more than 35 years of senior management,

underwriting, and broker experience to Ascot. Most recently, he served as chief risk officer for Overhaul Group Inc. He began his insurance career at Chubb.

East

NIP Group, headquartered in Woodbridge, N.J., appointed Erik Lindemann as senior vice president and general counsel. Lindemann has over 20 years of experience as outside counsel and, for the last 10 years, as in-house counsel to two insurers. Maryland Insurance Commissioner Kathleen A. Birrane appointed Sean

Sean McEvoy

J. McEvoy

associate commissioner Jamie Sexton of operations and promoted Jamie Sexton to serve as director of legislative and William Fawcett regulatory policy for the Maryland Insurance Administration. William Fawcett was appointed associate commissioner for property/casualty. McEvoy comes to the MIA with over 30 years of experience. Most recently, he served as assistant commissioner of policy and consumer services for the Maryland Commissioner of Financial Regulation. Sexton joined the MIA in September 2022 as director of health insurance regulatory affairs and national INSURANCEJOURNAL.COM

partnerships. Previously, she was director of state policy at the Immune Deficiency Foundation, legislative director for Maryland Senator Mary Washington and an associate in the Attorney General’s Consumer Protection Division. Fawcett will oversee the insurance administration’s property/casualty division. He most recently served as general counsel, secretary and head of legal at Allianz Global Corporate & Specialty.

Plymouth Rock Assurance Corp., headquartered in Boston, appointed Max Malaret as vice

president of claims in its independent agency auto group. Malaret comes to Plymouth Rock with more than 16 years of insurance industry experience, most recently as vice president of claims process for auto physical damage, subrogation and salvage with Liberty Mutual in Boston.

Midwest

Allyson Padilla of Blank’s

Insurance Agency in Olney, Illinois, has been installed as the president of the

Independent Insurance Agents of Illinois (IIA of IL).

Padilla will serve a one-year term. She is responsible for the general leadership functions of the IIA of IL and will act as an official delegate of the association at state and national functions. Padilla was born into Blank’s Insurance Agency but began her insurance career full-time in 2008. The agency, founded in 1936, provides all types of insurance and bonds, including personal lines and commercial insurance. She is the second in her family to serve as association president; her mother Julie INSURANCEJOURNAL.COM

Hearring held the post in 1998.

Prime Insurance Co.,

headquartered in Chicago, named Bart Schlueter as senior vice president and head of healthcare professional liability. Schlueter has over 25 years of experience in the insurance industry, most recently serving as vice president at RT Specialty.

Alliant Insurance Services, headquartered in Irvine, California, named Carrie Hansen as vice president within its employee benefits group in Minneapolis, Minnesota. Hansen has over 15 years of employee benefits experience, previously serving as an associate at SkyWater Search Partners and as a senior consultant, employee benefits at The Christensen Group.

South Central

WTW, headquartered in London, England, added two new leaders in Dallas. The company appointed Frank Scardino as North America strategic sales leader and leader of the Dallas market. Scardino joins WTW from Lockton, where he most recently served as a senior partner and president of Lockton’s Dallas office. Kenneth Gould has been named a strategic client engagement leader within corporate risk and broking, North America. Gould is a 40-year insurance industry veteran, joining WTW from Lockton. Alliant Insurance Services

hired Chad Patzke as a vice president within its Alliant Americas division. Patzke is based in Oklahoma City and will serve clients throughout

the Southwest region. Before joining Alliant, Patzke was an insurance producer and partner with Universal Insurance Agency Inc., an Oklahoma-based insurance and risk management firm.

Newfront, a tech-driven insurance brokerage firm based in San Francisco, has expanded its footprint with additions in Austin, Texas. Todd Burns joins as senior vice president and Austin market leader, and Lee Sheppard joins as associate vice president. Burns, who will oversee a number of Newfront associates in Austin, boasts a 20-year career in insurance and risk management. His prior roles include leadership at BKCW Insurance, business development leader at Willis, and compliance officer at Allstate. Sheppard brings 10 years’ experience in commercial risk and insurance that includes time as an underwriter, an account executive at Willis, and an independent agent.

Southeast

Alliant Insurance Services

named attorney Bobby Coleman of Mississippi as a vice president in the Alliant Americas division and Mike Griggs of Tennessee as a senior vice president in the division. Coleman, who lives in Jackson, Mississippi, has 27 years as an insurance defense lawyer, including workers’ compensation defense and real estate matters. Griggs, based in Nashville, joins Alliant after almost 20 years in the insurance business, including most recently as senior vice president at a global insurance brokerage.

West

Insurance Office of America (IOA) named Paul Sullivan west-

ern division president. Sullivan joined IOA in 2009. He was previously IOA’s regional president of the Northwest region. IOA is headPaul Sullivan quartered in Longwood, Florida.

Alliant Insurance Services

named Greg Barnes executive vice president, managing director, Alliant Specialty. Greg Barnes Barnes is based in Los Angeles. He most recently served as president at Lockton Cos.

Mark Racunas has

joined Alliant as senior vice president, Alliant Mark Racunas Specialty. Based in Los Angeles, Racunas has more than 20 years of experience in the insurance brokerage industry. Scott Canales has joined Alliant as executive vice president, Alliant Specialty. Based in Los Scott Canales Angeles, Canales spent 38 years in the construction industry, with 31 years as a construction broker. He most recently held leadership roles at Lockton Partners LLC.

NOVEMBER 20, 2023 INSURANCE JOURNAL | 19

News & Markets Ending Polarization and Building Future Leaders: Travelers CEO

By Susanne Sclafane

hallenges facing today’s business leaders include keeping pace with rapid change, the leader of Travelers said in late October while also going out of his way to cast light on a serious obstacle to forward progress: polarization. “I think it’s a big problem,” said Alan Schnitzer, chairman and chief executive officer of Travelers, as he spoke during the 100th episode of the carrier’s webinar series, “Wednesdays with Woodward,” hosted by Joan Woodward, president of Travelers Institute, the public policy division and educational arm of Travelers. “There are lots of challenges we face as a country — education policy, healthcare policy, immigration policy. Wherever you stand on those issues … whether it’s in Washington or state capitals among our public policy makers, or whether it’s among ordinary citizens, I don’t think gridlock serves us,” Schnitzer said. “As a leader, I try to be very outspoken

20 | INSURANCE JOURNAL | NOVEMBER 20, 2023

about rejecting cancel culture. I think cancel culture and the inability to engage and share ideas is problematic.” Instead, he encourages the opposite. “I try to promote pluralism. This idea that competing ideas can coexist — that we can agree to disagree but respect people’s rights to have different points of view,” he said. “Through that, you get together and hopefully in the spirit of constructive engagement, you try to solve problems.” Schnitzer was very clear that he believes he has no business weighing in on red-vs.blue, pro-this or anti-that unless the topic under discussion impacts the insurance industry and its stakeholders. Woodward — crediting Schnitzer with the idea of creating the webinar series that aims to assemble “thought leaders from across industry and government” to discuss today’s biggest challenges and to explore “pressing topics at the intersection of insurance, business, and public policy” — asked the CEO, “Why do you believe it is important for companies to be thought

leaders on societal challenges?” “I’m not sure that I do think that’s important, at least not on societal issues generally,” responded Schnitzer, who had a corporate law practice before joining Travelers. He went on to clarify that the mission of the Travelers Institute “is about weighing in on issues that address our stakeholders, our industry, our customers, the communities that we serve … Given our industry leadership, given our expertise, I think

Alan Schnitzer, CEO, Travelers INSURANCEJOURNAL.COM

we’ve got the opportunity — and a responsibility — to weigh in on those things. But when it comes to societal issues that aren’t directly related to our business, aren’t directly related to our stakeholders, I don’t feel an obligation. And I think, probably more often than not, it’s a mistake to weigh in there,” Schnitzer said. The timing of the webcast of the event, occurring almost simultaneously with a congressional vote to finally push through a partisan logjam to elect Rep. Mike Johnson, R-La., as Speaker of the House, was purely fortuitous. Still, to viewers who signed up to attend the Travelers webinar weeks ago, the moment seemed well-timed as Schnitzer voiced his strong opinion that insurance leaders have a responsibility to speak out against polarization — proposing fixes ranging from encouraging

employees to be well-informed to offering a “civics-in-a-box” learning tool for organizations. It was not the first time Schnitzer spotlighted the topic. During an acceptance speech for the St. John’s University Insurance Leader of the Year award earlier this year, Schnitzer said polarization was an issue that was increasingly on his mind,

according to a transcript of the event. “We’re living in a moment when polarization is tempting and easy. More than ever, we’re all likely to live in a bubble and consume — and be consumed by — opinions and other content that speak almost exclusively to our views and viewpoints.” “And we don’t just have our views reinforced; we’re moved by forces — algorithms, grievance, culture and otherwise — that push us from polarization to intolerance,” he added. These same forces push us “to see people who don’t share our views as a threat, to be canceled — or worse,” he said.

‘We need to think about what bets we need to place today that are going to pay off down the road because some of these things take years.’ He noted that the “dangerous division is occurring against the backdrop of actual threats,” going on to list extreme weather, pandemic, war and geopolitical tensions, as well as public policy struggles related to immigration and infrastructure.

Beyond the Message: Civics in a Box

Beyond speaking out against polarization, Woodward noted that Schnitzer two years ago launched an initiative known as “Citizen Travelers” in an effort to drive that positive change through civic engagement. Schnitzer explained that Citizen Travelers is designed to “encourage and support our employees getting involved in civic life in whatever ways are important to them. It could range from

continued on page 22

News & Markets continued from page 21 registering to vote to running for elected office, and anything in between those two extremes.” The Travelers website describes Citizen Travelers as a collection of in-house programs and nonprofit partnerships that give employees “resources and support to learn more, engage in our democracy as informed citizens and help shape the civic life of their communities.” “I like to say it’s aggressively nonpartisan,” said Schnitzer during the webinar. “People should get out there and do what’s important to them — and engage in ways that they want to engage. But they need to engage.” Tying this back to his earlier message, Schnitzer said that as a CEO, he’s often asked to weigh in on issues — “some of them pretty controversial.” He added, “I’m not shy about weighing in on topics, controversial or not, that are important to our business. But where there are topics that aren’t directly related to our business, who am I to develop Traveler’s view on that?”

‘There are lots of challenges we face as a country — education policy, healthcare policy, immigration policy. Wherever you stand on those issues … I don’t think gridlock serves us.’ “We’ve got employees, we’ve got customers, we’ve got agent and broker partners, shareholders that span the whole political spectrum. So, if it’s not an issue that’s front and center to our business, who am I to be expressing a corporate view? I may have my personal view, but I’m not sure Travelers needs to have a corporate view on those things.” Still, he said, “That doesn’t mean Travelers doesn’t have a role to play. We’ve got 30,000 employees who should, as citizens, have a view and should get involved … Citizen Travelers is meant to support them in doing that.” Woodward noted that Travelers Institute 22 | INSURANCE JOURNAL | NOVEMBER 20, 2023

has partnered with the Citizen Travelers employee group to deliver webinars focused on civic learning. “We’ve long been a good corporate citizen. This is about being a corporation of good citizens,” Schnitzer said, noting that he wants the initiative to expand beyond the walls of Travelers. “We’ve taken our experience and created ‘Citizen Travelers in a Box’ because I would love to promote this idea for other companies. We’re happy to share this program with other businesses. They can take it, they can white-label it, they can rename it. And we will share with them the things that we’ve learned, the things that have worked, the things that haven’t worked,” he said. “The more people engaging, the better,” he said, encouraging interested listeners to send an email to CitizenTravelers@ Travelers.com.

supported.” He recalled the last line of the first email he sent — “We’re going to get through this the way we get through everything — together” — to illustrate his intention. “Every week, I had hundreds of replies and I replied to every one of those,” he said, noting that the thousands of email conversations connected him with people that he probably would not have otherwise met. Later in the session, Schnitzer said culture gives everyone in the company a road map. “In other words, you can give people more autonomy if there’s a culture to guide them. And that may be more important in this business than many,” because in an insurance company there are “literally thousands of people that

The Pace of Change

During the webinar session, Schnitzer talked about a variety of other topics such as recruiting for the management team, the importance of culture, being a net attracter of talent (even including rehires of “boomerang” employees who left during the pandemic), Travelers’ work-from-home policy, D&I as a business imperative, Travelers’ investments in technology and innovation, and the importance of communication from leaders. Teeing up the communications topic, Woodward recalled lengthy weekly emails that the CEO sent to the entire Travelers workforce every Friday for the first five or six months of the pandemic, when everyone was working remotely. “That was unsettling, to say the least, to be scattered to the winds,” Schnitzer said, recalling his own feelings that prompted him to initiate the series of messages. “They were pretty substantive emails, and a lot of it was stream of consciousness … things that were on my mind,” said Schnitzer, noting that his goal was “to keep everybody feeling connected and INSURANCEJOURNAL.COM

make individual decisions to put risk on our books in terms of underwriting, and thousands of claim professionals that make individual decisions in managing our liabilities, our claims …” “When you’ve got that many people making individual decisions that individually, and collectively, are so consequential, it’s very important for those people to know what’s expected and for them to do it at a place that they appreciate,” he said. As for cancel cultures, and the need to fight against them, Schnitzer first mentioned his worries about polarization when Woodward asked him to list some of the biggest challenges facing today’s business leaders earlier in the webinar session. In addition to polarization, he said the macroeconomic environment is a

challenge, although he views inflation as less of a challenge for insurance than many other businesses. “Regulatory challenges, particularly in this industry — we see the problem with the availability of insurance in some states like California and Florida, and I think there were real regulatory challenges to that,” he added. “Maybe the one challenge that all of us face is the pace of change and the need to focus on what we need to do to prepare businesses for the future,” he said. “I can remember a time not all that long ago where it felt like you could go days or weeks or months and you could just focus on what you needed to do today,” he said, underscoring the now universal leadership problem of developing future-focused

strategies in a rapidly changing world. “We often think of it in terms of technology, things like artificial intelligence, and I think that’s appropriate, but businesses really need to think down the road. We need to think about what bets we need to place today that are going to pay off down the road because some of these things take years,” going on to quote an idea from Apple Co-Founder Steve Jobs — that innovation means “saying no to a thousand good ideas.” “It’s about avoiding a thousand good ideas that don’t really matter and [instead] identifying the couple of things that are going to move the needle, and investing and going fast and hard on those.” Travelers executives have identified AI as one of the things that matters. Referring to Travelers Institute’s second-most popular webinar installment, “Making Sense of Emerging AI Capabilities like ChatGPT,” Woodward asked the CEO to share his specific thoughts on the use of AI in insurance. “It might be different for every business, but I think it’s hard to say the opportunity that comes from technology and AI isn’t going to be profound across the entire economy.” “For business leaders, that means figuring out how to get it right,” he said, adding that while this isn’t “an urgent crisis today or tomorrow, in the coming days, weeks, months and years,” leaders need to “figure out what bets are going to be the right bets for their businesses.” During a second-quarter earnings conference call, Schnitzer talked about the $1.5 billion that Travelers will spend on technology in 2023. “That includes a meaningful increase in investments to develop required cutting-edge AI capabilities built on modern cloud technology,” he said.

Note: This article originally ran online at Insurance Journal’s affiliate, Carrier Management, CarrierManagement.com. Sclafane is executive editor of Carrier Management, a publication of Wells Media Group serving property/ casualty insurance carrier executives. She is a media professional with deep background in the P/C insurance industry. INSURANCEJOURNAL.COM

NOVEMBER 20, 2023 INSURANCE JOURNAL | 23

News & Markets Harvard Claims Marsh Is to Blame for Its Loss of $15M in Coverage for Admissions Fight By Andrew G. Simpson

aving lost two bids to recover $15 million from its insurer to cover costs related to its failed defense of its admissions policy, Harvard University is now looking to hold its insurance broker, Marsh, responsible. Harvard’s excess insurer Zurich American denied coverage for the high-profile litigation because it had not been timely notified of the case. When the university went to court to force Zurich to pay up, Harvard lost in federal district court in November 2022 and then again on appeal this past August. The courts found Zurich rightfully denied coverage because it did not receive timely notice of the litigation. In a lawsuit filed in Suffolk Superior Court in Boston, the university now claims that the failure to file a timely notice of its claim with Zurich was malpractice on the part of Marsh. Harvard in 2014 had purchased a one-year, $25 million educational errors and omissions (E&O) policy from AIG that covered litigation costs for claims brought against the university. The school also obtained a $15 million excess E&O policy from Zurich American to cover legal costs after the AIG policy was exhausted. Both policies required Harvard to report legal claims no later than 90 days after the end of the policy period. The policies covered Nov. 1, 2014, to Nov. 1, 2015. The original lawsuit by Students for Fair Admissions (SFFA) culminated with a landmark ruling by the U.S. Supreme Court in June 2022 that found Harvard’s affirmative action admissions policy was unconstitutional. The SFFA lawsuit was filed Nov. 17, 2014. Harvard’s primary carrier — AIG’s 24 | INSURANCE JOURNAL | NOVEMBER 20, 2023

National Union Fire Insurance — was immediately notified of the claim event but Zurich was not notified until May 2017, well after the 90-day notification window. AIG paid what it owed as primary insurer but Zurich denied the excess coverage. Harvard sued Zurich over the denial but lost. According to the state court complaint, Marsh was the broker responsible for the placement of the policies purchased from AIG and Zurich and, as its broker, Marsh undertook the contractual obligation to “prepare loss notices to insurers and notify insurers of claims.” Further, Marsh, as a licensed insurance brokerage, owed a duty to perform its duties in a “professional manner that accorded with the applicable standard of care,” according to the complaint. Harvard is seeking damages from Marsh for alleged breach of contract and for “tor-

tious violation of the professional standard of care” that it claims resulted in Harvard’s loss of access to its excess insurance coverage for the defense costs and other SFFA action-related expenses incurred in excess of the $27.5 million attachment point of Zurich’s excess policy. According to the timeline provided by Harvard, on Nov. 18, 2014, Harvard sent an email to Marsh regarding the SFFA action requesting that Marsh report the matter to AIG and for Marsh to provide an analysis as to coverage for the claim. Harvard says it did not discover Marsh’s failure to place Zurich on notice of the SFFA claim until May 2017. Marsh then formally reported it to Zurich and Harvard’s other excess E&O insurers. Zurich acknowledged receipt on May 25, 2017. Harvard argues that the receipt of Harvard’s instruction to provide notice INSURANCEJOURNAL.COM

to even a single insurer triggered Marsh’s contractual and professional duties, both as set forth in the broker contract and as “inherent in a broker’s standard of care generally” to determine which insurers should receive notice of the claim and to then proceed with providing timely and adequate notice to all such insurers. Harvard maintains that the inaction of Marsh was in contrast to that of another of its brokers, Risk Strategies Co., which the complaint says placed the entire tower of primary and excess general liability carriers for its policies with Harvard on notice of the SFFA action, “despite the absence of an initial explicit request from Harvard that it do so.” According to the university’s complaint, Marsh has taken the position it was instructed by Harvard not to notify excess insurers. Harvard denies that it ever instructed Marsh not to

notify excess insurers. Furthermore, Harvard argues, if it is true that Marsh had been told not to report the claim to Zurich, that should have trigged other actions by Harvard to confirm that in writing and to advise Harvard of the risks of not notifying the excess insurers. Marsh had no comment. Harvard asserts it has incurred and continues to incur SFFA action-related defense costs, fees and expenses in amounts that have already or will soon exceed the Zurich policy’s attachment point. As a result of Zurich’s denial, Harvard has lost the ability to access the Zurich policy’s $15 million policy limit. Harvard says Zurich’s denial of coverage also caused it to incur legal

expenses to assess options and ultimately to pursue Zurich for coverage. In late May 2020, Harvard retained the legal services of Anderson Kill P.C. to evaluate the consequences of Marsh’s conduct and Zurich’s resulting denial of coverage. The lawsuit was received by the Suffolk Superior Court on October 25. Harvard maintains the lawsuit is timely under a tolling agreement with Marsh that extended the period for filing claims.

Our limits are the lowest. Standalone personal umbrellas with just 250/500/100 on auto and 300 on homeowners. Discover the unexpected at PersonalUmbrella.com Admitted carrier, rated A XV by A.M. Best For licensed insurance agents Available nationally. Underwriting criteria varies by state. Visit us online for guidelines. A.M. Best rating effective 10/23. For the latest rating, visit ambest.com. California Insurance License 0D08438

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NOVEMBER 20, 2023 INSURANCE JOURNAL | 25

News & Markets Companies May Be Employers of Contract, Franchise Workers Under US Labor Rule By Daniel Wiessner and Nate Raymond

U.S. labor board on Oct. 26 issued a final rule making it easier for workers and unions to hold companies liable for labor law violations by their franchisees and contractors, reviving an Obama-era standard heavily criticized by trade groups. The rule from the National Labor Relations Board (NLRB) will treat companies as so-called “joint employers” when they have control, even if it is indirect or not exercised, over essential terms and conditions of employment such as pay, scheduling, hiring and firing, and supervision. A company that is found to be a joint employer would likely be forced to become more involved in setting and implementing workplace policies, and could be required to bargain with unions. The rule takes effect on December 26 and will only be applied to cases filed after that date. Several business groups have expressed opposition to the rule, and the U.S. Chamber of Commerce, the nation’s largest business lobbying group, said it was exploring litigation to challenge it. Glenn Spencer, vice president of the Chamber’s employment policy division, said in a statement that it “defies common sense to say that businesses can be held liable for workers they don’t employ at workplaces they don’t own or control.” Joint employment has been one of the most contentious labor issues for many U.S. businesses since the Obama admin26 | INSURANCE JOURNAL | NOVEMBER 20, 2023

istration, when the NLRB had adopted a similar standard that trade groups said was unworkable and would curb franchising. The new rule eliminates a regulation adopted during the Trump administration that was favored by business groups requiring companies to have “direct and immediate” control over contract and franchise workers in order to be considered joint employers. NLRB Chair Lauren McFerran in a statement called the new rule “a legally correct return to common-law principles” and a practical approach to ensure that the entities that effectively exercise control over workers’ terms of employment respect their bargaining obligations. The Democratic-controlled board approved the rule on a 3-1 vote. Its lone Republican member, Marvin Kaplan, in a dissenting opinion called the rule an “unprecedented and unwarranted expansion of the Board’s joint-employer doctrine.”

The rule will broadly affect industries such as manufacturing and construction that rely heavily on staffing agencies and contractors to provide workers, and franchises such as McDonald’s MCD.N that are not typically involved in franchisees’ day-to-day workplace issues. Business groups have said the rule would further complicate collective bargaining, making it more difficult for unions to negotiate contracts with businesses and undermining the NLRB’s stated goal of strengthening workers’ rights. Supporters of the new rule, including labor unions, say the change is necessary because of an uptick in the use of contract labor, including workers provided by staffing agencies, in recent years. Worker advocates say companies have avoided being held accountable for labor violations under the more lax standard adopted during the Trump administration.

My New Markets Active Assailant Program

Market Detail: WealthGuard Insurance

Group offers an Active Assailant program. An active assailant is a premeditated malicious physical attack, by an active assailant who is armed with a hand-held weapon that causes direct physical loss and/or bodily injury or death. An Active Assailant Insurance Policy is designed to address the impact of potential losses from an active assailant incident. These losses may include but are not limited to damage to property; business interruption; lack of ingress/egress to property/premises; additional business recovery expenses; consultancy and public relations; relocation expenses; counseling; employee training; security; medical expense. Active assailant security is provided by the MAP Syndicate and Amlin Syndicate at Lloyd’s. Submission requirements: schedule of locations; parishioner/congregation numbers; revenues split by location (if revenue cover required); security details including guards, weapons searches, response planning; details of any active assailant incidents in the past 20 years. Has pen. Available Limits: Limits of liability up to $5 million are available. Carrier: Rated A+ by S&P and A+ by A.M. Best. States: Available in all states plus District of Columbia. Contact: Rebecca Dias; sales@wealthguardig.com; 832-479-0042

Entertainment Programs

Market Detail: ISC (Integrated Specialty Coverages) offers a full spectrum of insurance coverages on a short term or annual, renewable basis for the planning, creating, development, and shooting of film or related media. Abacus, an ISC company, also has programs to protect your clients’ special events, from concerts and theatre through to charity galas and weddings. Film production highlights include 50-plus types of productions; stunts, cast, animals and more; admitted in all jurisdictions. Special events highlights include coverage in the U.S. (50 states plus DC) and foreign locations; 200-plus types of events; admitted in all jurisdictions. Available Limits: Not disclosed. INSURANCEJOURNAL.COM

Carrier: Not disclosed. States: Available in all states plus District of Columbia.

Contact: Hadar Raz; info@iscmga.com;

866-716-7242

Small Commercial E&S Risks

Market Detail: New Age Underwriters Agency offers a new platform for direct quoting and binding for small commercial excess and surplus (E&S) risks. Quote bind and issue for contractors’ general liability, lessor’s risk, vacant buildings, vacant land, restaurants, excess liability, monoline property, commercial package and cyber. Appointment required. Available Limits: Not disclosed. Carrier: Non-admitted; rated A by AM Best. States: Available in all states plus District of Columbia. Contact: Marty Ascher; m.ascher@ newageins.com; 516-488-2500

Monoline Commercial Auto Liability and Physical Damage

Market Detail: ANCR Risk Group Inc., a managing general agency providing commercial insurance products and services to the property and casualty industry, offers monoline commercial auto liability and physical damage coverage. ANCR Risk is a comprehensive underwriting, loss control and claims administration company specializing in monoline commercial auto liability and physical damage. Agency appointment required. Coverages and limits: commercial auto liability $1,000,000 CSL; commercial auto physical damage; any size fleet; up to Class 7 vehicle size; 200-mile radius. Submission

requirements: Acord application with contact information; FEIN; target premium; garage location; loss runs (3 years currently valued); radius and usage. Preferred classes: artisan contractors; distributors food/drink/materials; oil and gas operators; service contractors; appliance dealer/ repair; surveyors; professional services; construction; restaurant suppliers; agricultural use; parts delivery; beverage distributors; engineering; architectural; exterminators; florist; nursery; hardware/ lumber; HVAC; insulation; landscapers; laundry; office supply; pharmacy retail; pool service; real estate developers; sales and marketing; wholesale. Claims expertise: experienced and dedicated staff of in-house claims adjusters and field adjusters to timely manage any claims with a focus on cost containment. Has pen; email submission info to sales@ancrins. com. Has pen. Available Limits: Commercial auto liability $1,000,000 CSL. Carrier: Admitted; rated A- VII by AM Best. States: Available in Texas. Contact: Jay Wagoner; jaywagoner@ ancrins.com; 972-887-3780

This section brought to you by Insurance Journal's sister website:

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Need a Market? Find It. FAST NOVEMBER 20, 2023 INSURANCE JOURNAL | 27

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News & Markets

California Jury Awards $332M to Man Who Blamed His Cancer on Use of Roundup

California jury has awarded $332 million to a man who sued chemical giant Monsanto Co. contending that his cancer was related to decades of using its Roundup weedkiller. A San Diego Superior Court jury awarded damages in a lawsuit filed by Mike Dennis, 57, of Carlsbad. He was diagnosed in 2020 with a rare form of non- Hodgkin’s lymphoma. His lawsuit contended that his illness was related to Roundup`s active ingredient, glyphosate. Dennis had treatment and has been in remission for nearly three years but there is no cure, Adam Peavy, one of his

attorneys, told KNSD-TV. “His doctors have told him it’s going to come back and we’re just waiting to see if that happens,” Peavy said. The jury found that Monsanto, which is now a division of pharmaceutical and biotechnology giant Bayer, failed to provide warnings of Roundup's risks. But jurors also ruled partially in Bayer`s favor by finding the product design wasn't defective and the company wasn't negligent. Dennis was awarded $7 million in compensatory damages and $325 million in punitive damages. In a statement to KNSD-TV, Bayer said

it believes “we have strong arguments on appeal to get this unfounded verdict overturned and the unconstitutionally excessive damage award eliminated or reduced.” “There were significant and reversible legal and evidentiary errors made during this trial,” Bayer added. Bayer bought Monsanto for $63 billion in 2018 and has been trying to deal with thousands of claims and lawsuits related to Roundup. In 2020, Bayer announced it would pay up to $10.9 billion to settle some 125,000 filed and unfiled claims. Copyright 2023 Associated Press. All rights reserved.

California FAIR Plan Increases Commercial Coverage Limits to $20M Per Location

he California FAIR Plan Association is offering increased commercial coverage of up to $20 million per location. Prior to the adjustment, the maximum limits for commercial coverage were $8.4 million per location. Business owners policy property coverage limits will also W2 | INSURANCE JOURNAL | NOVEMBER 20, 2023

increase to $20 million, effective December 14. There are no additional underwriting requirements for these increased limits, and no additional documentation beyond the previous requirements for commercial applications and endorsements is needed to obtain coverage at the increased limits,

according to the FAIR Plan. As of September 2023, the FAIR Plan had 330,101 policies in force, representing a nearly 21% increase since the beginning of 2023. INSURANCEJOURNAL.COM

News & Markets

Idaho Woman Files Lawsuit Against Fertility Doctor By Gene Johnson

n Idaho woman is suing her onetime fertility doctor, saying he secretly used his own sperm to inseminate her 34 years ago, the latest in a string of such cases brought as at-home DNA sampling enables people to learn more about their ancestry. Sharon Hayes, 67, of Hauser, Idaho, said in the lawsuit that she sought fertility care from Dr. David R. Claypool, an obstetrician and gynecologist in Spokane, Washington, in 1989 after she and her then-husband had been unable to conceive. She wanted an anonymous donor, and, according to the complaint filed Wednesday in Spokane County Superior Court, Claypool informed her the donor would be selected based on traits she selected, such as hair and eye color, and that the donor would be screened for health or genetic issues. He charged $100 cash for each of several treatments, saying the money was for the college or medical students who were donating the sperm, the lawsuit said. But last year, her 33-year-old daughter, Brianna Hayes, learned who her biological father was after submitting her DNA to the genetic testing and ancestry website 23andMe, Brianna Hayes told The Associated Press on Thursday. W4 | INSURANCE JOURNAL | NOVEMBER 20, 2023

“It`s been an identity crisis, for sure,” she said. “This was hidden from me my whole life. I felt traumatized for my mom, and the fact that I`m a product of his actions is off-putting.” Hayes also learned something else: She had at least 16 other half-siblings in the area, she said. It was not immediately clear if any other women are pursuing legal claims against Claypool. The AP was unable to reach Claypool through phone numbers listed for him. His lawyer, Drew Dalton, declined to comment in response to an emailed request, saying he had not had a chance to speak with his client. Dalton told The Seattle Times, which first reported about the lawsuit Thursday, the matter had been in mediation. But the newspaper reported that Claypool claimed he had no knowledge of the allegations and didn't know Sharon Hayes. He stopped practicing in 2005, he said. “I know people are very happy,” Claypool said of his past patients. “But this is the first I’ve heard of anything in 40 years.” A number of cases of “fertility fraud” have arisen as online DNA services have proliferated. Last year, a New York Times story said more than 50 U.S. fertility doctors had been accused of fraud related to donated sperm, and a Netflix documentary focused on an Indiana fertility

specialist who secretly fathered at least 94 children while inseminating patients. A Colorado jury awarded nearly $9 million to three families who accused a fertility doctor of using his own sperm to inseminate mothers who requested anonymous donors. The claims in Sharon Hayes' lawsuit include fraud, failure to obtain consent in violation of state medical malpractice law, and violation of state consumer protection law for “his scheme to charge cash for his own sperm, while he was representing it was a donor`s sperm,” said RJ Ermola, an attorney for Hayes. Brianna Hayes said she has enjoyed getting to know her half-siblings, but she has never met Claypool. She initially sought genetic information to see if it would help explain health issues, including a childhood bout with leukemia, “conditions that do not run on my mom`s side of the family.” She said her mother has struggled with the revelation: “She's a puddle this morning,” she said. “She feels immense guilt for putting me in this situation. I told her, ‘This wasn’t you at all, you went through all the appropriate channels to do what you needed to do. You were just being a mom, wanting to be a loving mother.” Copyright 2023 Associated Press. All rights reserved.

INSURANCEJOURNAL.COM

Special Report: Wholesale Talent

Michael Conklin, Ryan Specialty

Making a Great Place to Work E&S Brokers Share Their View on Talent Strategies By Andrea Wells

ith a staggering 50% of the current insurance workforce set to retire in less than 10 years, potentially leaving more than 400,000 positions unfilled, nearly every insurance organization is struggling to recruit new talent while retaining their best talent. But what makes a great place to work?

Why do the best employees stick around? What attracts and retains the best talent in today’s competitive talent landscape? Insurance Journal asked these questions to a handful of the largest surplus lines wholesale brokers, some of whom have experienced unprecedented employment growth in recent years, hiring hundreds — even thousands — of employees in a short time

28 | INSURANCE JOURNAL | NOVEMBER 20, 2023

frame. Here’s what they had to say about creating a great place to work.

Build Something

Michael Conklin has been an HR professional for three decades but only recently joined the insurance industry as executive vice president and chief human resource officer for Ryan Specialty in August 2023. As a recent job candidate,

he shared what attracted him to Ryan Specialty. While Ryan Specialty is not a new organization, the firm is much younger than his previous employer, he said. “I left a company that had been around for over 200 years, one of the oldest bank charters in the world,” he said. Conklin says being able to build an organization that could potentially be around 200 years into the future is exciting to think about. “To be a part of an organization that 200 years from now, many generations in the future, will be doing business in the world … and be a legacy … that was one of the biggest things that brought me here,” he told Insurance Journal. Conklin says that the desire to build something great is not unlike what others want when seeking a new employer, especially younger talent who are just beginning their careers. “Whether you are right out of school or tenured employee. People want to be developed and we need to meet them where they are, with focused, deliberate, and value-added development,” he said. When it comes to competing for top notch talent, offering a competitive compensation package and broad employee benefits is the minimum of what candidates expect, according to Conklin. “You INSURANCEJOURNAL.COM

have to make sure that you’ve got a competitive package, competitive benefits, whether it’s the 401(k), whether it’s your medical, whether it’s your parental leave, all of those things are really just table stakes and what companies have to do.” But to keep the best employees, organizations must create an environment that wins their hearts and minds, too, he advised. To do that employers need to focus on providing soft benefits that employees value. Those benefits will differ by region and by office, he said. “We’re 4,600 employees strong across a hundred-plus locations across 28 states, and in six countries,” he said. “We’re not naive to think that our culture is this and only this,” he said. What works in Sweden may not work in the UK, Canada, Pennsylvania, or Chicago. “That’s where a lot of companies get it wrong, they say, ‘Here’s the box and everybody’s needs to fit into this box,’” he said. When looking to create a great place to work, stay focused on what matters and keep it simple, Conklin suggests. “Create an environment where it’s easy for folks to get into the office,” he said. Then make sure the office is a place where employees feel safe and comfortable, he added. “And when they are there in the office, take care of them, he said.” That might mean filling their stomachs, too. Because who doesn’t enjoy good food, he asked. “If you win the hearts, minds, and stomachs, people will stay forever.” INSURANCEJOURNAL.COM

Neil Kessler, CRC Group Provide Something

Leaders searching for talent or working to retain the best talent need to stay focused on what their employees need to be successful in today’s market. That means delivering the right tools that make their job easier, and better, says CRC Group’s President and Chief Operating Officer Neil Kessler. CRC Group has hired hundreds of new employees over recent years. According to Kessler, the biggest attraction for new production talent has been the firm’s investment in the right tools that make production easier. “We’ve invested a lot in technology to make their jobs easier, including data and analytics tools that give them better insights into the business,” Kessler said. “That platform is how we get people to come here because it drives a lot of value for them.” Kessler added that those same tools have attracted more than just producers. “I really think that’s what has attracted so many people to us over the last few years in this growing sector.” Kessler says while the hard market cycle will eventually come to an end, he doesn’t see the need for adding new talent in the wholesale sector, or in industry, subsiding anytime soon. “We’re very focused on hiring and growth and being sure we retain the right talent, and I don’t see any let up in

sight when it comes to the growth of the firm and the growth of our need to expand,” he said. He sees an opportunity for CRC and others to hire talent from recent insurance company layoffs as well. “There’s a lot of folks at the carriers that can be successful here, and our folks are out there trying to find them and hire the right ones,” he said. “I hope that folks that have left carriers will think of the wholesale world and think of CRC specifically because we think we can be a good home for a lot of those people, whether that’s production or placement.” His advice for other leaders today: Take care of people. “People are our resource … We don’t have factories, we don’t have plants, we just have people.”

Katie Katzman, Amwins Amwin’s Katie Katzman, head of HR, agrees. “Really support your employees and provide them with those opportunities for career development and the associated training,” she said. That helps to create happy employees, she says. Amwins and other wholesale firms have invested time and financial support to create training programs to attract new college grads. “We’ve worked very hard with our recruiting team to build those relationships, and to help expand risk management

Adam Mazan, Risk Placement Services insurance programs in colleges,” she said. Katzman says it’s vital to create development programs for current employees seeking new opportunities as well. “We are trying to develop our internal employee population, by providing opportunities for those who maybe are in a support role but want to move up into a higher-level marketing role, or want to move into a production role,” she said. This works well as more senior workers look to shed some responsibility, too. “We’ve established a program that when folks are ready to exit the business, that we can do it in a very consistent manner that includes turning over that book of business,” Katzman said. “We love to see a retiring broker turn their book into multiple new brokers. If we can take a book and spin that out to two, three brokers, that’s a win.” People say that wholesale is a young man's game, according to Adam Mazan, vice president, Pacific Region, Risk Placement Services. “It’s a lot of time on the road visiting clients. It’s a fast-paced environment. I absolutely love it.” But at some point, people want to slow down. “But they still have an immense amount of intellectual and reputational capital that they’re able to

continued on page 30

NOVEMBER 20, 2023 INSURANCE JOURNAL | 29

Special Report: Wholesale Talent continued from page 29 offer.” It’s important to pair those veterans with younger people to develop a succession plan, he said. “Looking at those opportunities and creating solid succession plans so that when individuals do retire, there’s not a blip in the business flow.”

best.’ So, we’re always looking for the best people, and that’s reflective in our collaborative culture,” she said. It’s that culture that makes people feel safe and makes them want to continue working for the long-term, which doesn’t exist a lot these days, according to Bonner. “People are jumping a lot. And I think that is something that’s different about us,” she said, adding that new employee turnover is less than 3% at their firm. She credits the company’s family ownership and family values for that trend.

Jamie Bonner, H.W. Kaufman Group Family Advantage

While family ownership used to be more common within wholesale firms, today it is less so. But being a family-owned organization has helped Burns & Wilcox stand out to candidates, according to Jamie Bonner, corporate vice president, Talent Acquisition, H.W. Kaufman Group. Sharing the story of the group’s family ties “really resonates with candidates now more than ever before,” she said. Today, the firm is run by the third generation of family owners — Danny Kaufman, president of Burns & Wilcox and executive vice president for its parent company, H.W. Kaufman Group and Jodie Kaufman Davis, executive vice president and board member at H.W. Kaufman Group. Bonner believes there is a “psychological safety” employees and potential recruits value in a company like Burns & Wilcox. “Danny often says, ‘We don’t need to be the biggest, but we want to be the

Danny Kaufman, Burns & Wilcox “The Kaufman family are not absentee owners,” she said. “They’re here every day.” People want that in an employer, she added. “They’re looking for a place that is not going to be sold,” she said. “We’re not going to lay people off during the downtime. … We don’t have to have that shortterm thinking or deliver on the expectations of a publicly owned company.” Danny Kaufman added that such stability is important in today’s challenging insurance market — stability in the workplace and stability in the turbulent insurance market, too. “Stability is really important to people as they’re trying to build a book of business, and build their careers,” Kaufman said. “They want to know that in three years, or five years’

30 | INSURANCE JOURNAL | NOVEMBER 20, 2023

time, that we’re not flipping ownership, we’re still going to be here to support them and let them grow their careers.” That means also providing stability in the marketplace, Kaufman added. “We’re seeing a lot of turmoil right now on both ends, whether you’re a small MGA or a large wholesaler, where they’re losing access to markets just because of what’s happening in the marketplace in general,” he said. “That’s not happening to us; we’re actually getting more access to the markets, we’re getting more capacity with London domestic carriers,” he said. “So, the benefits, the compensation, are all hugely important. Ownership is hugely important,” he said. But also, the ability to write business is critical and a draw for talent today, he added. “We’re actually gaining more capacity when others are losing it in parts or in whole … even in California, Louisiana, Florida and the Carolinas,” he said.

Back to People

Danny Kaufman and others interviewed for this story agree there is nothing more important than people when it comes to creating a great working environment. “People first is really important, and not everyone realizes that” according to Kaufman. “Your number one asset is your people, especially in the insurance industry where it’s relationship driven.” Work is certainly important. “We want you to get the job done but make sure you balance it with your family life as well,” Kaufman said. “Don’t miss your child’s sporting event. Don’t miss birthdays. Don’t miss important things in

your life,” Kaufman says. Work hard, get the job done and do right by the client, he says. “But it’s all about balance.” Keep employees first, Bonner advises. Because “if you lose your people, you lose relationships,” Kaufman added.

Suzanne Carpenter, JenCap Group Suzanne Carpenter, vice president, talent acquisition, at Jencap Group, says it’s important for any hiring organization to showcase their firm’s culture and people during the recruitment process. That tactic has helped attract more than 150 new hires in the first nine months of 2023, she said. “It’s so important to tell your story in today’s job market,” Carpenter said. “We are authentic about who we are and the kind of culture we have.” That’s appealing to job candidates, she says. “We’ve had 25,000 people upload their resume to our website this year alone.” That means a lot to the leaders at Jencap who founded the organization just seven years ago. “It means that the market is embracing us and our reputation,” she said. “We started with just four people, and today we’re over 1,100 employees.” Her advice to other hiring leaders: Be authentic. “More than anything, say who you are and what you are about.” INSURANCEJOURNAL.COM

Insurance Journal asked E&S wholesale brokerages what makes their firm a great place to work. Here is what they had to say.

Professional Development

From the first day on the job, our Underwriter Assistants are beginning their path to becoming a broker with unlimited income potential. We encourage knowledge advancement with designation reimbursement, team collaboration, and learning the ins and outs of Underwriting. Our casual attire and work-hard-play-hard atmosphere inspire fun and friendly competition with monthly top sales winners and promotion announcements. — Bill Turgeon, Executive Vice President, Bass Underwriters

Working at Novum Underwriting Partners is the best experience I have ever had in a career choice. I believe the number one skill they leverage is an ability to see the potential in someone. Some companies develop a culture that is against improvement by avoiding questions or the appearance of not knowing something. At Novum, everyone asks questions. And everyone offers their best advice and perspective. Novum has been, and continues to be, the best company I have ever worked for. — Ron Finch, Account Executive I, Novum Underwriting Partners

Founders has a very play-hard, work-hard mentality that brings the best out of its people. They encourage self-growth and industry knowledge via education, additional licenses, and certifications. Your co-workers are your best advocate, and their willingness to help, and they want you to succeed just as much as you do. The professional aspect is just one piece of what makes Founders great. — Stephen Maniscalco, Vice President Healthcare, Life Sciences, Management & Cyber Liability Broker, Founders Professional

Brown & Riding is committed to supporting employees in growing their careers and finding the right fit for their strengths and skillset. It is essential to capitalize on the strengths of our entire team because we achieve so much more for our clients that way. Because of the teamwork that is evident in B&R’s culture, growth opportunities are available for everyone. — Courtney Murphree, Principal, Senior Vice President, Broker, Brown & Riding

(Arlington Roe is) a family-owned business, and everyone is treated like family. We all are empowered to do the right thing for the agents we work with and our co-workers. They like to promote within the company. They strongly encourage continued education so the employees can provide the best service possible. — Essie Bennett, Professional Liability Broker, Arlington/Roe

As Monarch continues to build out our national footprint, we have been able to maintain our family atmosphere. We work hard to combine teamwork and collaboration, which contributes to our average tenure of 15+ years with the company. Experienced people, along with our young, energetic management team and the national resources of Specialty Program Group, provide the innovation, technology and talent to problem-solve for our retail broker customers.

— Spencer Borisoff, Personal Lines Underwriter, Monarch E&S Insurance Services

INSURANCEJOURNAL.COM

NOVEMBER 20, 2023 INSURANCE JOURNAL | 31

Special Report: Wholesale Talent Professional Development Coming from a captive insurance company as an Underwriter to a Wholesale Broker, I can tell you it is a horse of a different color! Underwriting for a Wholesale Broker yields a vast variety of Commercial Transportation, which has broadened my perspective and knowledge of this field and fills my workday with a plethora of opportunities to service agents and their customers across the span of commercial transportation. Some days, it is overwhelming, but I never have a dull day, and my work leaves me with a feeling of accomplishment. — Brenda White, Commercial Transportation Underwriter, Johnson & Johnson Insurance Company

Work/Life Balance It is nice to work for a place that values you and your work ethic and treats you like family. From the top down, we genuinely care for each other and care if we succeed as a team. — Kim Bikcen, Executive Assistant, Johnson & Johnson Inc

Having a management team that is involved in the day-to-day operations, I feel, is one of the main reasons we are so successful. They are open to ideas and strategies from anyone on the team on ways to improve. We work closely as a team. They really do focus on the work/life balance. Family is key to ownership! — Melissa Ferguson, Underwriting Manager, RSI International Inc.

Work/life balance is very important to J&J. It’s important to get the job done; however, they also believe it’s important to have fun. — Susan Murray, Underwriting Assistant, Stateside Underwriting

32 | INSURANCE JOURNAL | NOVEMBER 20, 2023

Leadership You don’t keep employees for decades without doing it right. Our executives have an open-door policy and are always here for us for guidance and to continually improve not only for us but for our agents. When you know that leadership genuinely cares, it means more than any other perk. It’s much easier, regardless of the state of the market, to show up every day for a job and company that you love. I feel lucky every day to be a part of the RSI Family. — Kari Nelson, Vice President of Underwriting, RSI International, Inc.

Maximum is very much a collaborative and team-oriented company, led by a very supportive and helpful managing team who cares about their employees. There is no shortage of opportunity for personal & professional growth and development. — Laura Wunderlich, Vice President, Maximum

The leadership, our technology, the culture, everything feels like we are a step ahead of the game. It is an exciting time to be part of such a fast-growing and ever-improving company that strives to set the industry standard for service. — John Carey, Account Executive, Novum Underwriting Partners

The Jencap executive team is the best I have ever worked with. They are down to earth, approachable and they care about our employees and they are passionate about our industry. Jencap is also committed to early career talent with a robust internship and broker trainee program. Our motto is Better Together, and we really are at Jencap. — Barbara Winsky, VP Technical Training & Development, Jencap

INSURANCEJOURNAL.COM

At Brown and Riding, we care about each other’s success as well as the success of the company. In my experience, this is a rare quality. I appreciate leadership encouraging this mentality and cultivating a culture that ensures we can sustain it. This transparency allows all of us to become better at what we do. No matter what you’re facing, whether it be the hard market, a specific account, or another difficulty, the people at B&R make you feel like you are part of a team. — Samantha Holz, Account Executive, Brown & Riding

Collaborative Culture Our culture sets us apart. Our team members enjoy working with one another, and their collaborative energy is contagious. While culture can be cultivated from the top down, its organic growth and development are best created from the inside out. We are very fortunate to have such impressive colleagues working alongside us every day. — James McNitt, Healthcare Practice Leader, RPS

Johnson & Johnson values you as an employee. You work hard, and they reward you in many ways with a generous benefit package and time off schedule. You feel like you are all working together to make J&J stand out and a better place for all. This is now a large company, and our leaders actually know us, they know our times, who we are and where we work. Best company I have ever been at. — Barbara Bagge, PL Policy Services -Manufactured Homes/Marine & Rec/Flood, Johnson & Johnson

My close communication with my team on appetite and risk review allows us to be quick and nimble in our quote process, which makes a difference for all our Aviation broker teams. I have always called our Beacon Team “Small but Mighty,” and we truly work as a team — Underwriting, Risk Management, Audit … and Business Development — to provide service second to none to our brokers and policyholders. Our Beacon Aviation team is poised to really make some great headway in growing our General Aviation business together … and THAT is the exciting part! — Jamie Stern, Director of Business Development, Beacon Aviation Insurance Services

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Amwins is the best company I have ever worked for. The culture is amazing. The company management cares so much for each one of us employees. Not only are we rewarded for our hard work, but we are continually told how valuable we are to the company. Amwins is awesome! — Nancy Timmons, Amwins

RPS provides the most collaborative team in the industry. The ability to learn from others, advance your career, and carve your own path to success is unmatched. You are surrounded by an entire national team and local team that want to help you win and find solutions for our clients, and when you do, celebrate your success with you. — Mark Gallagher VP, National Transportation Practice Leader, RPS

NOVEMBER 20, 2023 INSURANCE JOURNAL | 33

Spotlight: Auto Claims Auto Claimants More Satisfied Even Though Repairs Taking Longer: J.D. Power By Jim Sams

uto repairs are taking more than twice as long as they did in 2021, but policyholders who filed claims appear to be taking that in stride. J.D. Power reported that the industry average claims satisfaction rating increased five points to 878 on a 1,000-point scale, even though the average repair cycle time increased to 23.1 days, up 6.2 days from 2022 and more than double the average repair time in 2021. Mark Garrett, director of global insurance intelligence for J.D. Power, said the bump is due to “concerted efforts by insurers to manage customer expectations.” “Insurers have been able to earn significantly higher auto claim satisfaction scores at a time when costs and rates are rising — even though it’s never taken longer to get a vehicle repaired,” he said. “Notable, too, is that insurers that have improved the most in overall satisfaction have done so in two key customer areas: showing concern for their situation at the beginning of the process and keeping them informed. Being empathetic toward the customer situation goes a long way in building trust with them.” The 2023 rating recovered much of what was lost in 2022, when the average satisfaction score dropped seven points from a record high of 880. J.D. Power blamed lengthy repair times, which had increased to 17 days from a pre-pandemic average of about 12 days. Even though repair cycle

times continued to deteriorate this year, customer satisfaction increased in nearly every factor, including settlement; first notice of loss; claim servicing; estimation process; and repair process. The only factor to decline was rental experience, which fell two points, J.D. Power said. One sore point for claimants was the amount of time that insurers pay for their rental cars. J.D. Power said a larger share of customers said their rental period was not long enough or they had incurred out-of-pocket expenses. Overall rental satisfaction for repairable claims drops 32 points when a car repair took 15 days or longer. Seamless digital interactions, on the other hand, create happier customers, but only if the customers prefer digital channels. J.D. Power said satisfaction declines among customers who prefer personal interaction but are directed to digital processes. Amica Mutual Insurance Co. seems to be getting the claims process right. The insurer earned the top rating among 26 insurers that were included in the ranking, with an average score of 909. Amica improved from an average score of 903 last year, when it also placed No. 1 in the ranking. Sean Welch, senior vice president of claims for Amica, said in a statement that the company anticipates customers’ needs and “proactively communicates,” especially when it is experiencing longer repair times.

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“We also leverage technology to expedite the claims process, issue payment quickly and maintain a strong network of reputable repair shops,” Welch said. “We know what an inconvenience it is to not have access to your vehicle, and we do everything in our power to make the process seamless for our customers.” Erie Insurance ranked second in this year’s survey, with an average score of 902. NJM Insurance Co. took third place, with a score of 900. USAA also scored 900, but J.D. Power does not include it within its ranking

because the carrier serves military families exclusively. Kemper ranked last, a position it has held in each of the last three years. Its customer satisfaction score improved, however, to 820 from 798 last year and the year before. J.D. Power’s study is based on responses from 9,659 auto insurance customers who settled a claim within the nine months prior to participating in the survey. It excludes claimants whose vehicle incurred only glass/windshield damage or was stolen, or who only filed a roadside assistance claim.

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Closer Look: Personal Lines Leaders Personal Lines Leaders

Top 50 Personal Lines Agencies Ranked by Total 2022 Personal Lines P/C Revenue

About the Personal Lines Leaders: The 2023 Personal Lines Leaders in this special feature are taken from Insurance Journal’s Top 100 Property/Casualty Independent Agencies as reported in August. This list utilizes only the 2022 personal lines property/ casualty revenue numbers of the independent agencies and brokerages that submitted data to the Top 100 agencies report. For more information on Insurance Journal’s Top 100 Property/Casualty Independent Agencies list, contact: awells@insurancejournal.com.

2023 Rank Agency Name

2022 Total 2022 Total 2022 Total Personal Lines Personal Lines P/C Revenue Revenue Premium

Total Number of Employees

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

$576,359,009 $2,423,293,434 $513,604,260 $3,000,000,000 $426,788,800 $3,200,000,000 $174,522,947 $150,000,000 $1,500,000,000 $138,437,000 $1,200,000,000 $129,000,000 $900,000,000 $124,000,000 $900,000,000 $119,414,180 $857,671,115 $117,784,365 $755,000,000 $114,608,563 $640,935,058 $100,500,000 $636,000,000 $98,123,476 $950,000,000 $94,798,715 $86,620,000 $744,243,000 $83,046,772 $581,094,105 $78,388,000 $912,477,000 $75,400,000 $503,000,000 $67,158,804 $668,158,075 $59,960,000 $435,000,000 $58,000,000 $57,600,000 $505,000,000 $46,000,000 $317,000,000 $41,491,000 $290,000,000 $32,893,911 $163,297,852 $31,831,126 $232,353,566 $31,198,076 $248,445,492 $31,000,000 $248,000,000 $29,757,000 $400,000,000 $27,078,250 $198,328,654 $24,878,197 $113,489,297 $23,300,000 $25,000,000 $21,710,805 $160,820,776 $19,919,000 $113,613,000 $19,835,489 $144,278,412 $18,455,000 $118,895,022 $16,789,570 $128,157,882 $16,271,512 $110,104,612 $15,893,336 $112,000,000 $15,399,752 $153,997,520 $15,149,868 $96,893,117 $14,850,000 $117,900,000 $14,768,602 $86,903,982 $14,528,812 $88,506,897 $14,468,659 $89,395,160 $14,441,424 $98,964,233 $14,265,000 $127,870,000 $13,626,979 $109,015,832 $11,722,035 $72,331,297 $11,539,423 $72,340,997

10,491 16,901 3,800 2,173 9,200 5,610 200 3,200 14,876 10,115 422 404 7,403 2,104 2,371 4,078 1,100 1,300 1,901 1,600 4,100 48 302 2,915 408 26 365 835 2,451 1,908 512 710 360 10,750 450 330 495 288 458 1,469 340 450 92 443 238 167 561 185 612 234

Alliant Insurance Services/Confie HUB International Ltd. BRP Group Inc. Highstreet Insurance Partners AssuredPartners BroadStreet Partners Inc. TWFG Insurance PCF Insurance Services Acrisure USI Insurance Services UniVista Insurance AIS Insurance* NFP Hilb Group LLC Leavitt Group RSC Insurance Brokerage Inc. (DBA Risk Strategies Co.) Cross Insurance Relation Insurance Inc. World Insurance Associates LLC Patriot Growth Insurance Services LLC Alera Group Premier Group Insurance Inc. Home Services Insurance EPIC Eastern Insurance Group LLC** Atlas Insurance Brokers LLC NavSav The Liberty Company Insurance Brokers Higginbotham IMA Marshall & Sterling Enterprises Inc. Sunstar Insurance Group Inszone Insurance Services LLC Lockton Towne Insurance** Huntington Insurance** Shepherd Insurance Starkweather & Shepley Insurance Brokerage Inc. Robertson Ryan & Associates Insurance Office of America Oakbridge Insurance ALKEME Kaplansky Insurance Agency Lawley Insurance Ansay & Associates Guaranteed Rate Insurance LLC (new) TrueNorth Companies King Insurance Partners (new) Heffernan Insurance Brokers TRICOR LLC

$2,403,607,386 $2,338,204,990 $743,380,139 $346,938,600 $1,670,000,000 $1,031,445,000 $158,500,000 $542,000,000 $2,548,520,636 $1,399,424,667 $146,488,214 $103,000,000 $739,804,661 $332,555,920 $308,466,000 $528,836,897 $235,169,000 $213,000,000 $372,892,596 $149,800,000 $580,000,000 $72,000,000 $46,000,000 $783,890,000 $81,368,814 $46,132,065 $51,996,794 $124,000,000 $354,467,000 $437,045,045 $89,887,447 $106,500,000 $69,076,647 $1,960,548,000 $74,244,684 $42,688,000 $64,575,269 $72,901,177 $61,093,865 $248,417,439 $59,421,242 $79,200,000 $22,060,353 $62,082,796 $41,272,128 $15,100,357 $90,676,000 $34,067,448 $175,837,662 $33,690,660

Main Office

Irvine, California Chicago, Illinois Tampa, Florida Traverse City, Michigan Orlando, Florida Columbus, Ohio The Woodlands, Texas Lehi, Utah Grand Rapids, Michigan Valhalla, New York Miami, Florida Irvine, California New York, New York Richmond, Virginia Cedar City, Utah Boston, Massachusetts Bangor, Maine Walnut Creek, California Iselin, New Jersey Fort Washington, Pennsylvania Deerfield, Illinois Littleton, Colorado St. Paul, Minnesota San Francisco, California Natick, Massachusetts Rochester, Minnesota Beaumont, Texas Gainesville, Florida Fort Worth, Texas Denver, Colorado Poughkeepsie, New York Memphis, Tennessee Rancho Cordova, California Kansas City, Missouri Norfolk, Virginia Columbus, Ohio Carmel, Indiana East Providence, Rhode Island Milwaukee, Wisconsin Longwood, Florida LaGrange, Georgia Ladera Ranch, California Needham, Massachusetts Buffalo, New York Port Washington, Wisconsin Schaumburg, Illinois Cedar Rapids, Iowa Gainesville, Florida Walnut Creek, California Lancaster, Wisconsin

Editor's Note: * = Carrier Owned Agency; ** = Bank Owned Agency INSURANCEJOURNAL.COM

NOVEMBER 20, 2023 INSURANCE JOURNAL | 35

Spotlight: Employment Practices Liability The Next Chapter: Employment Practices Liability

mployment Practices Liability By Peter R. Taffae (EPL) insurance has been available since the late 1980s. But it was not until September 1991

when the world witnessed the Clarence Thomas Supreme Court hearings and Anita Hill’s testimony, that people recognized that sexual harassment was prevalent in society. The phrase, “sexual harassment,” was coined by a group of women at Cornell University in 1975 who were exploring the behaviors that comprise sexual

36 | INSURANCE JOURNAL | NOVEMBER 20, 2023

harassment. In 1976, Redbook magazine conducted a survey that showed 80% of the respondents had encountered sexual harassment. Although existing for decades, it was the Supreme Court hearing that made the insurance industry stand up and focus on a risk transfer solution for the issue. Initially directors and

officers (D&O) underwriters were tasked with the underwriting, but not only were the two products — EPL and D&O — different in litigation frequency but also in severity. As one can imagine, and with the advantage of hindsight, that approach did not fare well for the insurance companies. Dedicated employment INSURANCEJOURNAL.COM

exception recently introduced. The coverage is 32 years old, and the wording, approach, and underwriting has for all purposes not kept up with the employment and litigation landscape. Over the course of 32 years, we have experienced cultural events that have had a direct impact on the coverage, those being: sexual harassment; gender discrimination; sexual preference discrimination; #MeToo; Black Lives Matter; and now, wage and hour frequency and severity at an all-time high. Before detailing the current state of the market with regards to Wage and Hour (W&H) insurance, a look back might be helpful. After the Depression, in 1938, the Fair Labor Standards Act (FLSA) was passed to address certain employment practices common during the Depression such as child labor, no maximum-hour work week, no minimum wage, lack of record keeping and overtime pay, etc. In 1941, United States v. Darby handed a significant decision confirming the constitutionality of FLSA, finding that it relates to the federal government’s power to regulate interstate commerce and provides uniform labor standards across the nation. practices underwriters were created, and they too faced challenges. Since 1991 when the insurance industry became focused on sexual harassment, wrongful termination, discrimination, etc., other than the introduction of “third party” coverage in 1997, with a few minor exceptions, the coverage has not changed, with one INSURANCEJOURNAL.COM

Personal Liability Exposure

In the past decades, there have been many amendments and new legislation that have expanded employees’ rights. Typically, when one thinks of wage and hour laws, one thinks federal (FLSA). However, changes occurring in states in the last few years compound the challenges for

corporate America and those underwriting W&H, with states enacting state laws on W&H and often imposing “personal liability” (personal liability exists in FLSA). The approach is concerning not only due to the number of states enacting such laws, but also because of the ability of plaintiffs to file litigation in W&H friendly states. Personal liability is a major concern as the states reference “owners, directors and officers” as those with possible personal liability exposure. Wage and hour litigation is very difficult to defend, and expensive. Most of the litigation occurs against firms with 10 to 2,000 employees. These firms typically have a “family like” approach to their employees, not the most significant record keeping, and often misclassification. In addition, one significant reason for the upswing in personal liability is the increasingly rigorous enforcement of W&H laws by government agencies. Regulatory bodies, such as the U.S. Department of Labor, have intensified their efforts to ensure employers’ compliance with labor laws. They actively investigate and penalize violations, holding responsible individuals accountable. Employees are recognizing their rights, maybe due to more media attention, and are increasingly willing to bring litigation when they feel that there has been mistreatment, leading to a surge in complaints and legal action. Adding to all this is changing workforce dynamics. Today’s workforce is evolving, the gig economy and remote work becoming increasingly prevalent. This adds to the

complexities of classifying employees, tracking hours worked, and deciding on overtime pay, leading to personal liability once violations are discovered. The rise in personal liability arising out of wage and hour violations can be attributed to a combination of factors, including stricter enforcement, heightened employee awareness, changing workforce dynamics, lawsuit-friendly environments, and evolving legal standards. This trend underscores the importance of staying well-informed about labor laws, maintaining compliance within organizations, and implementing proactive measures to prevent wage and hour violations. In an era where accountability is paramount, both employers and individuals in management roles must prioritize fair labor practices to protect themselves from the legal consequences of noncompliance.

Limited Options

Today’s insurance options, with one exception, are fairly limited unless the firm has 5,000-plus employees and is willing to turn to Bermuda for answers. Those in the 10- to

continued on page 38

NOVEMBER 20, 2023 INSURANCE JOURNAL | 37

Spotlight: Employment Practices Liability continued from page 37 2,000-employee range have historically had few options and all of those have their limitations. The most frequent approach taken by underwriters willing to offer W&H coverage is a sub limit of $100,000 to rare cases of $250,000. This “endorsement” is a sub limit of the policy aggregate. It is also “defense only.” It is also solely entity coverage. There are key components of the sub limit endorsement that it would be wise to understand. The coverage limit, as stated in the typical approach, is a sub limit of $100,000 to $150,000 of defense costs and is part of the policy aggregate limit. No one will deny that something is better than

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nothing but with that said, will the insured’s balance sheet be able to absorb $100,000? Frequently, however, we see a broker overwhelmingly prefer the option with $100,000 W&H, when the overall coverage is better on the option without W&H. Coverage triggers are different in each of the available endorsements. The most frequent trigger among underwriters is a written demand (most often summons and complaints being served). Is the “defense costs” amount enough coverage? Average defense costs are estimated at around $250,000. Penalties are substantial and determined by the pertinent state and/or federal guidelines, but significant enough that

studies have shown 98% of all wage and hour litigation gets settled. I attribute that to two main reasons: First, the allegations are very difficult to disprove, and second, the stakes are so high defendants ultimately conclude the only prudent course of action is to settle. There is one market that offers up to $1 million defense and settlement.

Wage and hour litigation is very difficult to defend, and expensive. Insurance professionals not following wage and hour personal liability state reforms and the increase in claims are doing

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their constituency a disservice. Plaintiffs see the opportunity; the personal assets of “owners, directors and officers” are vulnerable. Some states allow for indemnification, but that can jeopardize the financial stability of the company’s balance sheet due to the size of W&H litigation costs. The industry needs innovate and respond to these perils as it did in 1991 after the Clarence Thomas hearings. Join the lead in providing comprehensive EPL with wage and hour coverage. Taffae is managing director of ExecutivePerils, a national wholesale broker that has a national exclusive EPL and wage & hour program on A XV paper, available in all states and most industries.

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Idea Exchange: Is It Covered? Logic & Language and Forms & Facts Revisiting Terrorism Issues

esterday was my son’s 12th birthday but he didn’t spend it unwrapping presents or gorging on ice cream and cake. Most of our evening was spent solemnly observing unspeakable horror and devastation as the events of Sept. 11, 2001, unfolded.” That was the By Bill Wilson opening paragraph in an insurance coverage article I wrote for the Big “I” Virtual University (VU) on Sept. 12, 2001. My son recently celebrated his 34th birthday and, as of last month we once again we find ourselves confronting not just unspeakable, but unimaginable, horror from terrorist acts. On the morning of Sept. 11, 2001, I was working at my desk in my home office

40 | INSURANCE JOURNAL | NOVEMBER 20, 2023

when a friend called me. He said simply, “Turn on the TV.” When I asked what channel, he responded, “any channel.” As I turned on the television, I witnessed the second plane striking the World Trade Center. Perhaps sadly, one of the first things that crossed my mind was whether insurance would cover what I was witnessing. So, literally working overnight and consulting with several VU volunteer faculty members throughout the night, the next day I published probably the first coverage article on 9/11 called, “Insurance Implications of Terrorist Attacks.” The focus was on common policy exclusions such as War And Military Action, Governmental Action, and Orders Of Civil Authority, citing existing case law that might be relevant. Not long thereafter, I published a Part 2 article that expanded the coverage issues

to include exclusions that might apply to attacks involving biological, chemical or nuclear weapons. That was followed by an article examining whether the September 11 attacks might involve one or multiple occurrences.

TRIA and Beyond

In 2002, Congress passed the Terrorism Risk Insurance Act (TRIA) and I established a “TRIA Resource Page” on the VU that discussed the legislation and newly introduced terrorism exclusion endorsements filed by ISO and other advisory organizations and insurers. This resource was updated for revised legislation and coverage forms in 2005, 2007 and beyond. I believe the resource page was not updated after 2015 (I retired from the Big “I” at the end of 2016), largely because of a lack of inquiry by agents. Terrorism

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has moved to the back burner of coverage issues. Initially, given the unknown, largely unpredictable, and potentially catastrophic nature of terrorism acts of this scope and magnitude, the insurance industry introduced broad commercial lines terrorism exclusion endorsements. Personal lines coverage was not impacted, largely due to state insurance regulators refusing to permit the introduction of terrorism exclusions in personal lines. So, for a number of years, terrorism occurrences were excluded, but as required by TRIA, coverage had to be offered for many commercial lines of insurance and insureds could elect to purchase it. Over the years, where the perception of the risk of terrorist attacks on a large scale was believed to be on a decline (or perhaps due to our collectively short memories), along with the financial backstop provided by the federal government, most insurers began to reinstate terrorism coverage with an option for insureds to accept a terrorism exclusion for a premium credit. This could be changing, given recent events, perhaps coupled with an unprecedented influx of unvetted immigrants into the country. The purpose of this article is not to address any political, social or moral issues, but rather to focus on the fact that the perceived risk of terrorist acts in the U.S. has likely changed. In recent years, the country and the world have become more aware of cyber risks, though perhaps not as appreciative of the potential severity of such acts from a terrorism standpoint. In an increasingly interconnected society, it has become increasingly possible for small groups of people to reach very large groups of people in destructive ways. So, what are the insurance and risk management implications of this? In 2001, the very first coverage inquiry I received related to 9/11 was from an agent whose hotel accounts had contacted him about their overwhelming number of cancellations when aircraft were grounded. Coverage was sought under the civil authority coverage of their business income forms. Unfortunately, such coverage was triggered when the loss is “caused INSURANCEJOURNAL.COM

by action of civil authority that prohibits access to the described premises” because of a nearby covered loss. However, no civil authority had expressly prohibited access to these hotels.

Terrorism has not been on anyone’s front burner here for a long time, at least since 2015. This is just one example of the myriad claims that can arise from widespread disasters. Others include the obvious direct damage caused by terrorist acts, possibly followed by damage resulting from retaliatory governmental action (“destruction of property by order of governmental authority”) that could be excluded. If damage can be attributed to sovereign nations, consideration may also be given to war and military action (“Warlike action by a military force … or other authority using military personnel”) exclusions, though that was largely not the case following 9/11. In addition, consequential or indirect damage claims arising from direct damage are likely. These include increased debris removal expenses, business income and extra expense losses, increased costs due to ordinances or laws governing demolition or reconstruction, valuable

records and data processing losses, and the list goes on. There is great potential for liability claims involving both property damage and loss of life based on allegations that the terrorism risk was not properly managed, potentially triggering claims under general liability and professional liability (e.g., D&O) policies. To summarize, immediately following 9/11, terrorism exclusion endorsements were introduced in the U.S. and the federal TRIA act mandated that insurers, with a federal financial backstop, must provide the coverage if requested by the insured. Now, 22 years later, it’s my understanding that carriers more often don’t specifically exclude terrorism but can for a premium discount. Terrorism has not been on anyone’s front burner here for a long time, at least since 2015. With a real or perceived risk of terrorist attacks, especially in the hard market where we currently find ourselves, the insurance marketplace could be changing in the coming months. Be prepared and vigilant. Wilson, CPCU, ARM, AIM, AAM is the founder and CEO of InsuranceCommentary.com and the author of six books, including “When Words Collide…Resolving Insurance Coverage and Claims Disputes.” He can be reached at Bill@InsuranceCommentary.com. NOVEMBER 20, 2023 INSURANCE JOURNAL | 41

Idea Exchange: The Competitive Advantage Carrier Operational Stability

or nearly 30 years, I’ve been writing and consulting with insurance agencies, brokers and networks on the benefits of choosing the most stable carriers — stable from an operational perspective, which enables agencies to achieve greater success, rather than stable from a claims paying perspective, which is what the rating companies focus on. I’ve done a lot of coaching regarding carrier relationship By Chris Burand management and my clients’ success has been impressive. A large proportion of agencies and producers could not care less about operational stability. They want to write with every carrier available, which is why some networks that provide upwards of 500 available carriers are so popular. However, 500 quality insurance companies do not exist when all the factors are considered. I have successfully proven on a financial basis that certain carriers enhance an agency’s value, growth and profit margins. I have also shown how carriers lacking adequate certain resources cause agencies to do more work, roll business more often, cause claims problems, and might even be less than transparent with their agents about what commissions they are going to cut. Along that line, I’ve been fairly accurate in predicting which carriers would cut compensation and restrict their writings years ahead of their actions. Yet agents and producers who do not pay attention to carrier operational stability continue to survive. Agents can write with any and every company in their search for the lowest rates because if they must move the business, there is always a choice (well, unless you are in a coastal state, or maybe the Intermountain West, or parts of the Great Plains, and so forth) of some other company willing to write the account. One reason is that the producer does not pay an obvious price. They make the same commission rate, sometimes more because 42 | INSURANCE JOURNAL | NOVEMBER 20, 2023

agencies’ systems don’t recognize rewrites as renewals so the producer gets paid new business commission on a rewrite, whether the business is moved or not. The smarter producers understand that moving business takes time away from writing new business, but most producers’ books don’t grow much so they don’t lose anything. They’ve plateaued and all they care about is making the same amount, not more and not less. The only ones to suffer are the account managers who must do the work and the agency owner who must hire additional people to do the extra work involved with moving business. Two carriers come to mind who have especially poor results, year after year. These are large carriers that have made no material profits nor materially grown organically in 10 years. Remove a few interesting one-time gains, and they are in worse shape than 10 years ago. By and large, their products are poor, and I often see their claims scores as subpar. Almost uniformly, agency staff say they must put in hours of extra work on those books because the carriers cannot keep their underwriters and marketing people. With good agency management and leadership, those books would be moved, productivity improved, profits improved, and more time for new sales created. I know many agencies representing these two companies. Most agencies have taken

no direct action to quell their business. Why? Because on any given account, the rate was good even if the product was subpar and the producers are selling price. Imagine an attorney selling subpar legal advice for 10% lower cost (unfortunately this is easy to imagine). When you lose, you lose much more than the 10% savings. What is insurance but a legal contract? But these agencies keep moving along and provided the carriers don’t go insolvent, they keep writing with these carriers and the same carriers see an equal amount of business leaving (maybe better agents are taking those accounts?). No

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one is going hungry. No one is suffering the loss of their job. Sometimes they even negotiate extra compensation on their books and why not, these carriers have nothing to offer except extra money.

Operational Stability Is Critical

Carrier operational stability is critical though to the smartest and most strategic distributors and competitors. The smartest and most strategic distributors are those who understand that better suppliers enhance their business value. They are willing to eschew immediate gratification of selling a subpar product in order to sell better products often to better clients understanding that the long play has a huge payoff.

Many years ago, the big auto companies reviewed their suppliers. Toyota reviewed their vendors by doing a complete financial analysis of the vendor’s profitability relative to the parts they were purchasing. Toyota recognized the value of having quality vendors who would be partners for a long time, who made enough money to invest in the future, and who made enough money to build quality parts. They even advised some vendors to raise their prices to guarantee these qualities. Another domestic company felt they were winning by negotiating the lowest possible price. Their vendors did not always survive and indeed, one might argue the auto manufacturer did not

survive either, but they negotiated the lowest price so they could sell low prices.

The smartest and most strategic distributors are those who understand that better suppliers enhance their business value. Toyota is the world leader. And yet, a car is just a car. Failure of an insurance product is devastating to a family. Many businesses go bankrupt when they discover their insurance policy is materially deficient. When selling price, something gets lost whether it is coverage, claims service, underwriting or something else. The most strategic and smartest agencies know that by selling the coverages of the most stable carriers (again, from an operating perspective), they gain long-term success that will slowly put their competitors out of business. For strategic and smart agencies, sales will accelerate due to some combination of the weaker carriers faltering and they are not burdened by them, reputation gains, additional compensation on better quality, and likely a combination of all these factors. I see this already happening and the weaker competitors do not realize it. Yet, those weaker producers will be the tail that keeps wagging the dog. It’s easier for management to acquiesce to producers’ demands for enough companies to fit any possible client they come across than to build strategically. Fear rather than strategy is the more powerful driver. And there are enough insureds, enough money, enough carriers willing to appoint anyone and everyone, and all topped with significant ignorance relative to what is being bought and sold, that market knowledge does not really matter. Ignorance is bliss and I wish everyone blissfulness. But for anyone concerned about providing their customers with the correct coverages: Partner with the most stable carriers for long-term success. Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-4853868. E-mail: chris@burand-associates.com.

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NOVEMBER 20, 2023 INSURANCE JOURNAL | 43

Idea Exchange: Agency Management Buying and Selling: 5 Tips for Successful Agency Transactions

ou are going to sell your interest in your agency at some point. Whether the sale is internal, external, to a family member, employees, or to a large national organization, there are steps you can take in advance to make By Tony Caldwell sure the transaction is a success. Along the way, you may also be the buyer of one or more agencies. In this situation, you will also have a huge stake in a smooth transaction and transition. While a buyer and seller have fundamentally different interests in any transaction, they

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also share many common goals. Consider these five best practices ahead of a sales transaction to help ensure it goes as well as possible.

1. Be clear about what you want.

I often talk to agency owners about business issues, including the possibility of buying or selling, and find they haven’t really thought through want they want to achieve from the transaction. Often, they answer something like “the best price” or something similarly vague. Failing to clearly define what you want often leads to a less-than-satisfactory transaction. The deal could have been better structured in terms of the selection in buyer or seller, the transition period, the interregnum period

when the previous owner is still around, terms and conditions or simply sales price. Buying or selling an agency is perhaps the most important financial decision you will ever make and the decision should be approached as such. • Consider what your “best price” looks like. • How might your view on price change if you received more appealing terms and conditions? • What do you want the transaction to do for you and your family, or your continuing agency? • What do you want to happen to your employees? • Do you want a clean break with either the former owners or the buyer after

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closing or the chance for the former owner to stick around? For how long? As you think about what you want, I suggest tracking it all carefully on paper. Then, build a checklist of your priorities and line it up beside any potential deal. This will help you select the best seller or buyer, help you make the best deal and importantly, help you to avoid the pitfalls of a transaction that awaits the unprepared.

2. Prepare.

The Boy Scout motto is “Be Prepared” and one of the reasons that scouts become as successful as they often do in life is that they take that seriously. By thinking and planning ahead, they are prepared for what may come. In becoming an Eagle Scout, you’ve demonstrated that you have mastered those skills. In the same way, successful business owners can demonstrate that they have mastered the skills of building their business, positioning them as an attractive seller or buyer. Prepare your leadership. • If you’re the buyer, have you prepared not only yourself, but your team, to manage a larger, more complex organization? • Have you identified, recruited, and mentored those who will need to step into new positions of leadership? • If you’re the seller, have you developed a team of people who can lead when you’re gone if you’re perpetuating internally, or have you thought about what great leadership for your remaining employees looks like after you’ve retired? No transaction, from the buyer or seller perspective, can be as good as it can be without solid, well-prepared leaders. Of course, employing the use of management systems, financial understanding and capability, key personnel, and others can also be helpful in this process. The key, whether a buyer or a seller, is to understand what is required and work years ahead of a transaction to be prepared for it. It’s often said that you should run your agency as if it were for sale. That implies innovative systems, impressive people, INSURANCEJOURNAL.COM

strong books of business, comprehensive accounting and smart owner compensation. That way you’re prepared for when the time arrives — even if it’s unexpected. At the same time, the same tenets of preparation apply to a buyer. Having your leadership, systems, people, profitability, balance sheet strength, financing, and many other aspects of the business in top form puts you in the position to seize opportunities as they come.

3. Look for chemistry with a buyer or seller.

Our best clients are those with whom we have a relationship — those who see value in us beyond the transaction. The best buyer and seller relationships involve parties with similar chemistry, respect and alignment of values and goals. If you aren’t clear about your own values, the culture you are continuously trying to create and the kind of people you will, or will not, engage for business, now is the time to think that through.

Failing to clearly define what you want often leads to a less-than-satisfactory transaction. When you are aligned on these ideals, it can be easier to come to agreement on the mechanical parts of a deal. With chemistry, trust will arise organically and this can be the difference maker in a good or bad deal. It also allows for the whole exercise, whether buying or selling, less stressful, more rewarding, and much easier. Don’t buy an agency from someone you don’t like and respect and don’t sell to someone who you don’t believe shares your values. Without a good relationship built on the front end of a deal, nurtured through the negotiations and transition and finally, affirmed afterward, you’ll be entering into something you will likely regret.

4. Perform comprehensive due diligence. You are clear on why you want to do a deal and what you want from it. You know the buyer or seller. You’ve built a

relationship. The numbers look good. Let’s go! Not so fast. You are going to live with the results of this transaction for a long time. It is either going to make your financial future what you want it to be, or it could ruin it. Understand everything that has led up to a Letter of Intent (LOI) — typically a non-binding agreement that spells out the broad provisions of the deal — must now be proven by the buyer to the seller’s satisfaction. And the seller has to demonstrate to the buyer that he or she is the person they have represented themselves to be. Only after you’re completely satisfied, should you move forward.

5. Engage experienced advisors.

I’ve seen many deals fall through because the lawyers weren’t good psychologists or because they seem to think covering the downside is more important than balancing interests. These flaws come from people who don’t have much experience in helping someone transact the opportunity of a lifetime. Find someone with ample experience in transactions like yours to represent you. Understand that the LOI is just the beginning of negotiations. The details that come after, in the contract, are critical to both parties making the deal work over the coming years. Some of those details are related to tax treatment and the buyer’s and seller’s interests are often opposed to each other. A good tax advisor, who focuses on transaction work and doesn’t simply handle tax returns, can help both sides get what they need, as well as clarify what they should expect. Finally, consider engaging an investment banker to assist on either side of the transaction. Yes, they can be costly. But in almost all cases I’ve seen they make both parties far more money than they cost. When it comes to buying or selling, you may only do this once. Do it right. Caldwell is an author, speaker and mentor who has helped independent agents create more than 250 independent insurance agencies. Website: www.tonycaldwell.net. Emai: tonyc@oneagentsalliance.net. NOVEMBER 20, 2023 INSURANCE JOURNAL | 45

Idea Exchange: Sales & Marketing How a CRM Can Help Your Firm Create Compound Interest

RM. AMS. Have you heard of these acronyms? They stand for Customer Relationship Management software and Agency Management System, respectively. The lines between CRM and AMS can get a bit blurry, mainly because people tend to use the terms interchangeably. However, they are By Trent Warner two distinct systems that serve different purposes — and failing to leverage both could cost your brokerage thousands. Most brokerages have an AMS to manage their backend operations. Many assume that their AMS is sufficient for all their needs. This is a mistake. While an AMS is crucial for efficient backend operations and service, its benefits mainly come into play after the sale. If your goal is to acquire new customers, you need something more: a CRM. Integrating a CRM with your AMS is the only way to truly get a 360-degree view of your customer. It’s essential for creating scalability and maximizing the effectiveness of your sales and marketing strategies. Confused? Let’s dive in.

What Is an Insurance AMS?

An AMS is software tailored to meet the specific needs of running an insurance brokerage. Its primary focus is on postsale database management — operational tasks such as policy management and commission tracking. If you want a better connection between sales and service, you need an AMS. If you’re in the world of insurance, you’re likely familiar with AMS platforms like Applied 46 | INSURANCE JOURNAL | NOVEMBER 20, 2023

Epic, Hawksoft, and Vertafore products like AMS 360, QQcatalyst and Sagitta.

What Is a CRM?

A CRM is a software designed to handle customer relationships throughout their lifecycle. Unlike an AMS, a CRM does a lot of the heavy lifting pre-sale. A CRM tracks prospect information, automates sales and marketing campaigns, and analyzes customer behavior. Think of a CRM as the command center for your sales and marketing activities, enabling you to better connect with potential customers and close more deals. Hubspot, AgencyZoom, Sharpspring and Keap are a few popular CRMs in the insurance industry.

Reasons to Use a CRM

Now that we’re clear on the distinction between an AMS and a CRM, let’s explore the undeniable value a CRM brings to your insurance brokerage. Here are ways implementing a CRM can boost your revenue.

1. Eliminate Wasted Marketing Spend

A CRM gives you complete visibility into your marketing and sales pipeline. By tracking every lead from the moment they first interact with your website until they either become a customer or go cold, you can identify which marketing channels and campaigns are most effective at generating new customers. This information is invaluable for optimizing your marketing campaigns and reducing wasted spend. Think about it this way: Without a CRM, you can only track Cost Per Lead. When you have a CRM, you can track Cost Per Acquisition. The difference here is drastic. It means you can see which marketing campaigns are actually generating new customers — and which ones are just inflating your stats and wasting your budget. For example, let’s say you’re running a PPC campaign on Google. You’re spending a few thousand dollars per month on this campaign, and you’re getting a decent number of leads. But you’re not sure which of those leads are actually converting into customers. With a CRM, you can track which leads are coming from your PPC campaign and which ones are closing. You can also see which keywords are driving the most valuable leads. By eliminating wasted spend on keywords that are not closing, you can increase your conversion rate and decrease your cost per conversion. INSURANCEJOURNAL.COM

2. Sales and Marketing Alignment

How can you make your employees’ job easier and increase productivity at the same time? The answer lies in implementing a CRM system. If your sales and marketing team is Batman, a CRM is their Robin. Without a CRM, your people may be working in silos. Each individual follows their own process, and there is no quantitative way to measure their success. With a CRM, your team can work smarter, not harder. A CRM helps you keep track of all your potential customers, including their contact information, interests and stage in the sales funnel. Next steps are made clear, communication is centralized to one location, and the handoff from sales to marketing is streamlined. Plus, a CRM can automate many of the time-consuming tasks involved in sales and marketing, such as sending email campaigns, scheduling follow-up calls, and creating reports. This frees up your team to focus on more strategic activities, such as developing relationships with potential customers and closing deals. The results? Increased productivity, efficiency and profitability.

• Automate lead nurturing. CRMs allow brokerages to track leads through the entire sales funnel. This means that potential customers are not lost in the process, and automated workflows can be set up to nurture leads with personalized content, reminders and follow-ups. AMS is typically more focused on policy management and may not offer such lead nurturing features. • Personalize communications. A CRM makes it easy to create highly targeted campaigns. You can segment your contacts into specific groups, such as leads who downloaded an ebook about landlord insurance or current customers who expressed interest in adding a new policy, but then disengaged. This allows you to send them targeted recommendations and offers that are more likely to resonate with them.

3. Improve the Digital Experience

4. Win Back Lost Business

According to a recent study by Bain & Company, 78% of insurance customers say that they would be willing to switch insurance companies for a better digital experience. Without a CMS, it’s nearly impossible to create the seamless, personalized digital experience customers expect. Here are just a few ways a CMS can help insurance brokerages stay competitive in the digital age: • Follow up instantly. When a potential customer fills out a form on your website, you can use a CRM to automatically send them a personalized email follow-up. This email can confirm receipt of their information, answer any questions they may have, and schedule a next step, such as a call or demo. This ensures you consistently seize the moment while prospects are actively engaged. INSURANCEJOURNAL.COM

A Bain & Company study found the average customer lifetime value (CLV) in the insurance industry is $45,000 — but the top-performing insurers have CLVs that are up to 2.5 times higher. This means insurance brokers have a significant financial incentive to focus on retaining customers and winning back former customers and leads that went cold. Remarketing campaigns are a unique advantage of a CRM for insurance brokerages. They’re sometimes called “win-back campaigns” for a reason: They’re the compound interest of owning an insurance brokerage. Here are two key reasons why insurance brokers who don’t leverage remarketing are leaving money on the table: • Insurance is a cyclical product. Customers need to renew their policies on

a regular basis. Even if a lead goes cold or a customer has switched to a competitor, there is always a chance that you can win them back by offering them a free policy review where they might find better rates, more comprehensive coverage, or other incentives. Imagine this: Your firm started using a CRM in 2022. Across all of your marketing campaigns, you touched 100 new leads per month. Half of those leads converted into new customers. Using your CRM, you can set up automations to reach out to the leads that didn’t convert 11 months after they initially reached out. This window coincides with their insurance renewal period. By offering to review their policy and provide better rates or more comprehensive coverage, you can re-engage them without any extra effort. Now, instead of just 100 leads a month, you’re interacting with 150 — and this number compounds every year. • Win-back campaigns can help you, well, win back former customers. Some customers will stop working with you for reasons that are completely outside of your control. Maybe rates went up, or carrier placement has changed. Even if a customer has switched to a competitor or their policy has lapsed, there is always a chance that you can win them back. Your CRM will keep all previous interactions, emails and notes so you can pick up right where you left off. In the ever-evolving landscape of the insurance industry, independent brokerages cannot afford to underestimate the significance of a CRM. More than just a project management tool, a CRM serves as the linchpin for scaling marketing efforts and driving business growth. Warner is the managing director of Strategic Brand Builders, a marketing strategy firm based in New York City, New York. He has over a decade of experience providing marketing strategies for carriers and independent insurance brokerages. Website: https:// strategicbrandbuilders.com. NOVEMBER 20, 2023 INSURANCE JOURNAL | 47

Idea Exchange: Claims Higher Repair Costs, Supply Line Delays Drive Business Interruption Claims

he aftershocks of the COVID-19 pandemic have hit businesses hard, with inflation, supply chain disruptions, and increasing By John Nosari downtime. Just as we saw how ill-prepared our healthcare system was for the global outbreak, so was our economy, and our supply and distribution network. In addition to rising operating costs, equipment failures are a bigger threat than ever as higher prices and longer wait times make it difficult to fix or replace things. When equipment breaks down, companies are scrambling for spare parts and materials, paying more for repairs, and worrying about the possibility of a business interruption. It is a challenging time for commercial organizations, and they are looking to insurers, not only to help cover their losses, but to get them back in operation as quickly as possible.

Equipment Costs Up 16%

According to the Bureau of Labor Statistics, the Consumer Price Index (CPI), which measures the costs of goods and services over time, rose 4.7% in 2021 and 8% in 2022.

Although there are signs of easing inflationary and supply chain pressures, progress is slow. Over the same period, HSB has seen the cost of the replacement equipment it insures go up an average of 16%. Manufacturing equipment had the highest percentage increase at 19%, followed by electrical equipment, air conditioning 48 | INSURANCE JOURNAL | NOVEMBER 20, 2023

and refrigeration equipment, and boilers. It is also more difficult to source parts and get them delivered. The Federal Reserve Bank of New York’s Global Supply Chain Pressure Index (GSCPI), which measures supply chain conditions, has been higher than the standard deviation since January 2020. Although there are signs of easing inflationary and supply chain pressures, progress is slow. We are seeing delays for replacement parts of up to 22 weeks for refrigeration compressors, and 18 months for computer numerical control (CNC) machines.

hire contractors, schedule service, and make repairs. Smart sensors check facilities 24/7 to detect water leaks and frozen pipes, then send alerts so customers can shut the water off with devices controlled by smartphone apps. Other insurtech tools monitor equipment to improve operating efficiency, lower energy costs, and identify electrical system faults that could lead to building fires.

A “Take What You Can Get” Attitude

The combination of persistent inflation and equipment shortages has driven up the cost and the availability of key parts, sub-components, and machinery. As a result, trends have emerged that were not prevalent before the COVID-19 pandemic. Replace vs. Repair. If parts are not readily available to repair equipment, a business might decide to replace it instead, a practice many service providers embrace and may even encourage.

Increased Business Interruption Days.

HSB has experienced a 29% increase in the number of insurance claims paid that include business interruption losses or extra expense payments. Accept What’s Available. When it comes to repairs, business owners are more willing to replace trusted parts and equipment with less familiar substitutes. Faced with an unexpected breakdown, they take what they can get to resume operations.

Technology to Manage Risk

As spare parts get more expensive and harder to find, it is important for a business to properly operate and care for critical equipment. Increasingly, they are taking advantage of digital platforms that make it easier to keep track of equipment maintenance, INSURANCEJOURNAL.COM

The savings can be significant. In one example, sensors inside a healthcare center alerted the staff to a sharp drop in temperature, traced to a fresh air vent stuck open in a snowstorm. Had nearby water supply lines and sprinkler pipes frozen and burst, the estimated loss would have been $120,000.

The Future of Insurance

The inflation and equipment shortages we are experiencing may continue for some time. In addition, the industry will continue to face a lack of trained repair professionals. Insurance carriers can play a key role in helping their customers respond by

delivering technologies that help them predict and prevent losses. The widespread availability of advanced sensors is helping us extend and expand that predict and prevent model to the next phase of services we call connect and protect. We are learning through new connected technologies about how things work at insured locations, so we can offer more comprehensive and customized solutions and interventions. The full adoption by policyholders faces challenges and may take time, but the coupling of connected technologies with loss prevention and the underwriting of risks is underway.

The economy can be unpredictable, but technology is clearly transforming the future of insurance.

Note: This article originally ran online at Insurance Journal’s affiliate, Claims Journal, claimsjournal.com. Nosari is the senior vice president of commercial equipment breakdown claims at HSB. He has held roles in claims and engineering at HSB for more than 30 years.

November 20, 2023 Advocus National Title Insurance Company One South Wacker Drive, 24th Floor Chicago, IL 60606 The above company has made application to the Division of Insurance to obtain a Foreign Company License to transact Property and Casualty Insurance in the Commonwealth of Massachusetts. Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, 1000 Washington Street, Suite 810, Boston, MA 021186200, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.

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NOVEMBER 20, 2023 INSURANCE JOURNAL | 49

Closing Quote The 4 Key Factors Contributing to Rising Insurance Rates

By Jeff Menary

Inflation peaked in June 2022 at over 9%, a 40-year high.

For any type of business, spending more than it earns is untenable in the long term.

t’s no secret to buyers of almost any type of property/ casualty insurance policy — home, auto, business — that rates are rising, regardless of whether claims have been submitted. People may also have heard about major insurers who are pulling out of certain states and/or lines of business as their losses grow and their earnings shrink. Why? The reasons for rising insurance premiums are many and varied, but four key factors are contributing: economic inflation, social inflation, weather, and reinsurance costs. Inflation peaked in June 2022 at over 9%, a 40-year high. It has since decelerated, but insurance rates can’t adjust in real time. Rate-change filings with state insurance departments are most often an annual process (auto rates are generally filed every six months). Rates for some types of business are typically filed only every three to five years. Building material costs have increased 39% since the beginning of 2020, and between

January 2020 and January 2023, the Consumer Price Index of auto parts outstripped that of auto insurance rates by 25%, leading to huge U.S. underwriting losses for personal auto insurance. All this means that claims to replace or repair buildings and autos are larger. But there’s another type of inflation at work — “social inflation.” It’s a term used to explain the rise in claims’ costs that exceed those of economic inflation. Its main causes are increased litigation and escalating settlement costs (also known as “nuclear verdicts”), both based on a perception that the insurance industry has deep pockets. But all pockets have a bottom, and ultimately these losses are borne by policyholders through increased insurance premiums. In addition to a challenging financial climate, the actual climate has not been kind to insurers. Changing weather patterns keep producing more — and more catastrophic — weather events, which in turn lead to mounting losses for property/casualty insurers.

The Midwest has been especially hard-hit with derechos, tornados and hail. In December 2021 alone, the National Weather Service confirmed well over 100 tornados in Illinois, Iowa, Missouri, Minnesota, Ohio and Wisconsin; more than 60 of those hit Iowa. And a series of derechos has stomped across the same territory in the last few years, kicked off by the August 2020 storm (the so-called “Heartland Derecho”) that did $11 billion worth of damage in wind, rain and hail. Those record-setting damage costs fell to insurers. In turn, inflation and severe weather have had a waterfall effect, driving up the costs of reinsurance — insurance for insurance companies. This resulted in massive reinsurance rate increases in January of this year, along with a tightening of the market. Like primary insurers, reinsurers have also pulled back in certain markets, leaving carriers with limited options at much higher prices for their own insurance coverage. The bottom line is that many property/casualty companies are paying more for reinsurance, paying more claims for more money, and not taking in enough in premium to balance those costs. For any type of business, spending more than it earns is untenable in the long term. Menary is president and CEO of the Iowa-based insurer, Grinnell Mutual.

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Luke Donald, Captain of Team Europe, Winner of Ryder Cup 2023.

When strategy, determination, and spirit lead the way to a team victory, it’s more than just a win; it’s a triumph. At Applied Underwriters, we don’t just share that same drive to succeed, we champion it. Learn more at auw.com or call (877) 234-4450.